Here's the transcript [PDF] of day 7, August 13, 2012 in the Apple v. Samsung trial, which I've done as text for you. The witnesses this day were Boris Teksler back on the stand from the Friday before, then by videotaped depositions Jun Won Lee, Dong Hoon Chang, Timothy Benner, Timothy Sheppard, and then Apple's damages expert Terry Musika live. They were the last of Apple's witnesses.

Next, Samsung began putting on its case, calling as witnesses Benjamin Bederson and Adam Bogue, both to demonsrate prior art. And so I think we could call this Samsung prior art day.

It's also the day where Apple's Terry Musika, an economist, speaks to damages, and he seems not to have calculated product by product. He arrived at a total damages figure based on his assertion that all of Apple's claims of infringement were established as true, utility patents, design patents, and trade dress infringement. But there's no specific breakdown offered to help the jury figure out what to allot if they didn't agree that every single Apple claim was so. If only the utility patents were found to be infringed by the jury, or only one, or only the design patents, there was no easy breakdown of the figures provided to the jury to be able to calculate what the right damages figure should be.

The principal project creator of Launchtile, Benjamin Bederson, brings in videos and source code, demonstrating a snap back feature and zooming features that he wrote in the early '90s for Launchtile. And Adam Bogue testifies about the DiamondTouch table, which has a multitouch touchscreen designed for small group collaboration, but which can be used by a single user. Bogue says he's used it himself for everything since around 2004, but the table itself was invented in 2001. In 2003, Bogue showed it to Apple, to the hardware engineers there, and he has emails about the meeting that are shown to the jury. One of the apps he testifies about was Fractal Zoom, which he called Mandlebrot, and he shows a video about it. And he also testifies about another application, Tablecloth, which also had a snap back feature. Not that the jury paid attention to any of this. Or, more accurately, they did, but they were laboring under a false idea, planted by the jury foreman, that if prior art code can't run on an iPad or iPhone, it's not prior art. That is not the law.

Here's how Samsung highlights just one problem with the jury's damages award in its motion [PDF] for judgment as a matter of law, filed after the verdict:

Moreover, while Mr. Musika’s royalty analysis assumes each Samsung product infringes all Apple’s claimed utility patents (RT 2114:15-2118:24; 2122:16-2123:6), the Nexus S 4G was held not to infringe the ‘163 patent; the Replenish not to infringe the ‘915 patent; and the Transform not to infringe the ‘381 or the ‘163 patent. Dkt. 1931. By using one-half of Mr. Musika’s calculated royalty, the jury improperly applied the same royalty rate to all five products, despite the fact that the jury reached different conclusions about infringement.

Oops.

It presents the court with a dilemma now. If, for example, the jury allotted damages for a phone they found was not infringed, which they did, how do you subtract from the total when you don't know how much they figured that "infringement" was worth?

Here's another what if: if any of the three patents the USPTO has -- after the trial -- preliminarily found invalid, contradicting the jury's view that there is no prior art, are ruled invalid with finality before the end of this trial and post-trial time period, then what? The jury allocated damages for all three of those then-invalid patents, and so then what happens, without the math to use to recalculate the damages? It's clearly not fair to have Samsung pay the full amount if three of the utility patents are tossed overboard.

Samsung's position is that in that case, you have to have a new trial on the damages part, at least, which Apple opposed, on the grounds that the only way to overrule a jury is if their figures are monstrously wrong:

To set aside the damages award, Samsung must satisfy a significantly higher standard than
the test for JMOL on liability. The Court “upholds a jury’s damages award unless grossly
excessive or monstrous, clearly not supported by the evidence, or based only on speculation or
guesswork.” Energy Transp., 2012 WL 4840813, at *11 (internal quotation marks omitted).
Samsung “must show that the award is, in view of all the evidence, either so outrageously high or
so outrageously low as to be unsupportable as an estimation” of damages. Id. (quoting Rite-Hite
Corp. v. Kelley Co., 56 F.3d 1538, 1554 (Fed. Cir. 1995) (en banc)). Damages need only be
“‘within the range encompassed by the record as a whole.’” Powell v. Home Depot U.S.A., Inc.,
663 F.3d 1221, 1241 (Fed. Cir. 2011).

Personally, I'd call the jury's figures monstrously and demonstrably wrong, but I don't get to rule on it.

By the way, the judge makes an interesting Freudian slip. In the middle of this general section, where William Price, the lawyer for Samsung, is asking Musika how the jury could do such math if it wishes to find less than all of Apple's claims true, the judge breaks in and says that the court reporter has been going without a break for two years, and it's time for a break for lunch. She means two hours, of course, but she says two years. Because it felt like years to her, one assumes.

Beginning on page 175, I see Musika explaining how someone could calculate patent by patent instead of just product by product when figuring damages. It started me wondering. If the judge wanted to correct the jury's math, could she just use the method Musika suggested instead of having to redo the damages part of the trial?

Also, notice please pages 180 and 181, where Price asks Musika about what date he used to start figuring damages, and he answers that he used the August 2010 date, from the meeting between Apple and Samsung when Apple raised its complaint about Samsung products.

Do you see how as soon as Musika says that, Price moves on as if nothing significant happened? He knew he had just what he wanted, and if he'd highlighted it to the witness, Musika would try to fix his mistake somehow.

By mistake, take a look again now at Samsung's motion [PDF] for judgment as a matter of law. Note on page 23, Samsung writes that Musika used the wrong date, and here's why they think so:

Actual notice is similarly a prerequisite for recovery of damages or profits for registered trade dress infringement because Apple does not display the trade dress with the required statutory language identifying its registration. See 15 U.S.C. § 1111; RT 2007:21-2008:1.

Mr. Musika based all of his damage estimates for patent infringement and registered trade
dress dilution on a notice date of August 4, 2010, the date of a meeting between SEC and Apple
representatives. PX25A1.2; RT 2095:6-21; 2168:18-2169:10. But only the ‘381 patent was
mentioned in the associated presentation. PX52.12-16; RT 1965:22-1968:11. The earliest
notice Samsung received of the ‘915 and D’677 patents and Apple’s registered trade dress was
Apple’s filing of the April 15, 2011 complaint. RT 1968:20-1970:2. The earliest notice
Samsung received of the ‘163, D’305, D’889, and D’087 patents was Apple’s filing of the June
16, 2011 amended complaint. Dkt. 1903 (Final Instruction Nos. 42 & 57). Mr. Musika’s reliance on an erroneous notice date inflated the revenue he used to calculate Samsung’s profits and Apple’s damages by more than $3.3 billion. See JX1500; Wagner Decl. at 25. Because the jury calculated Samsung’s profits and Apple’s damages based on Mr. Musika’s use of an incorrect notice date, the Court should vacate the award and grant a new trial on damages. See Litton Sys., Inc. v. Honeywell, Inc., 140 F.3d 1449, 1465 (Fed. Cir. 1998) (new trial required “if a jury may have relied on an impermissible basis in reaching its verdict”); see also In re First Alliance, 471 F.3d 977, 1001-03 (9th Cir. 2006) (remanding for new trial and consideration of remittitur where “one of the figures used” by jury to determine damages award was improper); Brocklesby v. United States, 767 F.2d 1288, 1294 (9th Cir. 1985) (holding that “judgment must be reversed if any of the three theories [underlying it] is legally defective”).20

__________20
The Court’s conclusion that a preservation obligation arose in August 4, 2010 (Dkt. 1894 at 16) does not establish that Apple also satisfied the more stringent statutory notice requirements for damages on its patent and trade dress claims as of that date.

And on page 184, Apple rests its case in chief, and the jury leaves the room. And then on the next page, Samsung puts in its pro forma Rule 50 motion, and again Samsung points out the failure to apportion damages product by product, as well as its failure to prove infringement claim by claim:

For the utility patents, Apple has not submitted evidence limitation-by-limitation showing infringement. They didn't even attempt to do that with their experts, and we believe that that alone shows -- also, we did show on cross-examination that these were not infringing.
The same applies for the design patents. Apple has failed to prove infringement....

With respect to damages, there's no apportionment that's been established. There has been no product-by-product damages that have been broken out, and we believe that that's insufficient as a matter of law.

There's no causation that's been proven, and also they have -- excuse me -- only had duplicative damages that they've asserted.

Whether the judge/appeals court will agree or not with Samsung is yet to be determined, but what I'm showing you is how lawyers do what they do. They know what they want a witness to say, whether their own and particularly the other side's witness, and when they get it, they don't wave a flag at that moment. But everyone on the team saw what Price did, and they were rejoicing, I'm sure. I had not known much about Mr. Price before this trial, but now that I see him in action for the first time, he is impressing me.

Incidentally, the judge had earlier told the parties that they could file 3-page briefs regarding the Rule 50 motion that Samsung told her they'd be doing orally, but then following up with a brief. Then, after Samsung says orally what it says, the judge changes her mind and refuses to let them file any brief. So they have to wing it, off the top of their heads, and it matters a lot, because if they forget something, there's no going back later to fix the omission.

Here's how it went, with Samsung's lawyer Mr. Zeller trying to cover everything orally that he can think of on his feet, and I've taken the time to do it all without the all caps, because it's important. It shows you exactly what Samsung's position is on what it thinks Apple has failed to prove by that point in the trial. And then you see Apple's rebuttal, and finally the judge rules. After Zeller makes his short remarks regarding Samsung's Rule 50 motion orally, he reminds the judge that she had earlier said they could file a brief also in writing, and he'd still like to do that. She refuses, and this begins a long discussion, beginning on page 187:

THE COURT: Okay. Anything else that you'd like to state on the record?

MR. ZELLER: Well, Your Honor, we would, of course, like the opportunity to outline these in writing. I mean, the court did say we would do that earlier.

THE COURT: I have reviewed -- every time I check our ECF, there are, like, three or four more motions that are filed, and I never have briefing on Rule 50, never. Never, ever. I've never had briefing on Rule 50 before.
And just in terms of keeping up with all of the motions that have been filed, to say now do another order on Rule 50 when I never have briefing on Rule 50 motions, I'm sorry, I just don't think I can.

MR. ZELLER: This is, of course, an important motion, Your Honor.

THE COURT: Understood.

MR. ZELLER: We obviously want to do it for preservation purposes, but the court is
obviously not inclined to grant it in any event, we would ask for that opportunity.

Obviously Apple is going to argue -- we're trying to make our grounds sufficiently broad at this moment moving orally in order to make sure that we've covered everything.

But we know, of course, Apple is going to argue later there's some sort of procedural default.

Obviously our view is they have not proven their case, and they haven't proven it as to any of the elements that are required here.

The court saw their witnesses. They put them up, for example, and they said "Did you do a survey?" "Yes, I did. This is what it showed."

We don't think that that is, as a matter of law, sufficient in order to carry their burden, and we would be able to outline these things and provide citations at least to the evidence, Your Honor, that we believe supports that.
But --

THE COURT: I'm understanding your motion to be moving on absolutely every claim that Apple has made that a reasonable jury would not have sufficient evidence to rule in their favor.
So I am assuming that you are, and I hear you, moving on every single claim that Apple has made.

MR. ZELLER: That is correct, Your Honor. Certainly we will -- we do move on that basis.

Let me give some specific examples, your
honor.

For example, they introduced absolutely no evidence with respect to particular phones that they claim were sold in the United States. There is no evidence, for example, as to the Galaxy Ace, which is JX 1030, the Galaxy S i9000, JX 1007, or the Galaxy S II i9100, which is JX 1032. There's zero evidence that's been adduced in this case that those have been sold in the United States. They represented that they were. They provided no evidence.

And I can go through a much longer list of these kinds of particulars, Your Honor. We had understood we were going to do this in writing, and so when the court asked, is there anything further we want to say, there is much more we want to say.

But we think that it's more efficient to simply put it in writing. I can go down this list and I'm certainly happy to do it now.

THE COURT: Do it now. I'll give you five minutes. Go ahead.

MR. ZELLER: Your Honor, with all respect, five minutes is not enough where someone is asking for two and a half billion dollars on a whole host of claims.

THE COURT: Well, why don't you have whatever you have. Go ahead. I'm giving you an opportunity to make your record. Whatever you would like, go ahead.

MR. ZELLER: I mentioned that there was no evidence that was provided as to certain devices being sold in the United States by Samsung.

In addition, Apple presented no evidence that showed that the Gem, the Samsung Gem phone, which is JX 1020, infringes the '381 patent.

And, in fact, that was never disclosed in their local patent contentions as required.

There's no evidence of active inducement by Samsung in this case.

All that has been adduced in this case so far by Apple is that Samsung, the parent, was aware.

But that is insufficient as a matter of law for actively inducing infringement.

As we mentioned earlier, of course, there is no evidence that Apple has met or proven deceptive similarity in the context of purchasing for the design patents as required.

As a matter of fact, Apple's experts acknowledged that that is not the analysis that they did. They didn't even attempt to apply the proper legal standard under the law.

In fact, the only witness who testified about the hardware design patent similarities was Peter Bressler, and he specifically acknowledged that it was his understanding that it was not necessary that the similarity be deceptive.
Of course, the court is aware that under Gorham, the Gorham standard as articulated by the Supreme Court and as confirmed by Egyptian Goddess, Apple has to prove that there -- that the similarity is such that it would deceive the ordinary observer in the purchasing context.

And Mr. Bressler acknowledged that that was not the standard he applied.
In fact, again, he was the only person who offered any testimony on these alleged similarities.

Apple did, of course, offer various
hearsay blog statements and press reports, but the court has said that that is not admissible for the truth, so it cannot be relied upon by Apple to prove a substantial similarity.

Also, Mr. Bressler acknowledged he had no real world evidence of any kind of deception or similarities between the designs.

In addition, there were differences that were shown with respect to the products at issue that also showed that they are not infringed. I can recite as much as the court would like on that, but an example would be with respect to the Galaxy 10.1.

Mr. Stringer testified that an important aspect of this design was that it was a single vessel on the back.

We don't meet that limitation. We do not practice that, and that is undisputed. It's not a single vessel when you're talking about the Galaxy Tab 10.1. It is a different design.

And there has been no rebuttal to that point whatsoever.

Same thing with respect to the hardware designs for what we at least shorthand call the smartphones.

Mr. Stringer testified that an integral part of what was new and original about those designs was that they were flat.

Samsung does not have that same design, and again, that is undisputed.

With respect to the '305 design patents, essentially it's the same story.
Dr. Kare was the witness who testified about that design patent. She did not, and did not even attempt, to apply the Gorham deception in purchasing standard.

In fact, all she offered an opinion on was essentially that she thought the overall similarities were there, which is not sufficient under Gorham.
In addition, she also acknowledged that she paid no attention and did not factor into her analysis any kind of functionality.

And of course the court is aware that functionality has to be factored out of any kind of analysis under Richardson, the Federal Circuit decision in Richardson, in order to find infringement.

And also, Dr. Kare did not even consider prior art, she admitted that as well, which, of
course, is an integral part of the Gorham standard as further articulated by Egyptian Goddess, and again, this is an admission by her that she did not do so.

I'll talk a little bit more about dilution in a moment, but Dr. Winer, for example, acknowledged that there was no evidence of dilution.

I mean, even though what Apple would argue is that the standard is likelihood of dilution, the fact is that these phones have now been in the market, these tablets, for a considerable period of time. If Apple cannot point, at this stage, months and years later to any actual evidence of loss, dilution, blurring and the like, it is obviously unlikely at this point. That is the only argument they have, frankly, on dilution.

I would further say, Your Honor, with respect to the trade dress dilution arguments -- actually, let me step back and talk about the infringement argument that Apple has made, which is, of course, at this point only limited to the, to an accusation against the Galaxy Tab 10.1.

And also, this would apply equally to
dilution.

But let me start with functionality, Your Honor, which is that Apple bears the burden of proving, with respect to the unregistered trade dress, that that trade dress is not functional.

It has not done so. It offered no evidence to substantiate that.

Dr. Bressler acknowledged he applied a standard for non-functionality that was, number one, incomplete; and, number two, wrong.

What I would also say in this regard, Your Honor, is that with respect to trade dress -- and this is from Leatherman, the Ninth Circuit decision in Leatherman, it says, "for an overall product configuration to be recognized as a trademark, the entire design must be non-functional."
That's what they have to prove. You can't just simply pick and choose among this product configuration that they're claiming and then just sort of wave their hand and say it's not functional.

They must prove that that entire design is not functional. Mr. Bressler admitted that portions of that design aren't that functional.
That, in itself, defeats Apple's ability to carry forward that claim.
And that applies equally to dilution as well, because as the court is aware, with respect to its unregistered trade dress, Apple bears the burden of proving that both with respect to the, the infringement claim, as well as the dilution claim.

Then, as the court is also aware with respect to the dilution claim, all that that's -- you know, that also now includes the phones.
And we don't believe that there's been any kind of evidence showing that there's a likelihood of dilution and, similarity, for trademark infringement, no evidence of likelihood of confusion.

In fact, again, Apple's own experts acknowledged that by the time people actually complete the purchasing process, based on the information that they have available to them, they know what phone they are buying.

Apple, of course, recognizing that that is fatal to their claims, has tried to argue that there's post-sale confusion, and that's really all that they're left with.

But, number one, that is not a theory that was asserted timely in this case.
Number two, Your Honor, courts have made very clear that post-sale confusion is not properly available in instances where product configuration is the trade dress claim, and that makes sense, Your Honor, because otherwise what you're saying is that a, a -- one competitor has an exclusive monopolistic right to the appearance of a product from a distance, which really makes absolutely no sense unless what you're talking about are outright counterfeiting cases where sometimes courts have recognized an exception.

But the court will recall that we had extensive briefing on this point, but product configuration, as it's been articulated by the Supreme Court and the Ninth Circuit and other courts of appeals, is a red flag because it is dangerous to competition.

And it is dangerous to competition because competitors, if they're allowed to monopolize a product feature that has some utilitarian advantages, that can harm competition.

And it does not advance the purposes of the Lanham Act in doing so. The Lanham act is
supposed to protect source identifying information. It does not protect ideas. It does not protect concepts. It does not protect functional or utilitarian product aspects.

And that means in a very, very broad sense, because, again, the purpose of the Lanham Act is extremely limited, and in this particular instance, the -- Apple actually made no effort to show that these features of trade dress were not functional.

Literally the only thing they did is they had Mr. Stringer claim in completely conclusory terms they're completely aesthetic which is, a, false and not even consistent with the testimony of Mr. Bressler and the other witnesses and utterly implausible, but in no way can it amount to the substantial evidence that they are required adduce on this element.

Furthermore, Your Honor, there's no evidence that the trade dress, the actual trade dress that's being asserted here, is famous.

The court is aware that they have come up with this construct, to put it kindly, this imaginary construct of what they think their trade dress is.
It ignores, in fact, well-settled law because it's actually the overall product as it's presented to the marketplace. They literally are X'ing out and covering up key aspects of that trade dress because they, of course, know that if they include that in there, the trade dress claims, of course, would be quite obviously flawed because these are elements that Samsung does not even argue were used.

But there is no evidence that the general consuming public, as required for trade dress fame, for dilution level fame, is recognized without such features as the home button or the Apple logo.

And, in fact, the only survey that was submitted in this case, Your Honor, the court will recall, the court has limited to its proper purpose as only being evidence of secondary meaning.

Secondary meaning, of course, is not equivalent to fame. Fame is a much, much higher standard and has to reach that household recognition among the entire consuming public of the United States.

And there is simply no evidence that would allow that burden -- to show that that burden has been met by Apple.

I would also add, Your Honor, that there's no evidence of any kind of blurring in this case. As I mentioned earlier, Dr. Winer actually testified to the opposite. He mentioned, and acknowledged, that even after all this time, there is -- there's no indication that Apple has lost any sales, had any harm to its reputation, or otherwise suffered from any dilution after all this time.
And that, of course, is an essential element. This likelihood of dilution by blurring is an essential element of the dilution claims as well.

To elaborate a bit more on the damages front, Your Honor, as I mentioned, as a matter of law, these are just not -- the damages foundation that was adduced here is not sufficient. It's not sufficient for disgorgement of profits; it's not sufficient for Apple lost profits; it's not sufficient for reasonable royalty.

One thing I would mention, Your Honor, is that there's no evidence of causation. There's no evidence of causation with respect to Apple's lost sales. There's no evidence that it had -- had there been -- well, actually, let me try and rephrase this in another way.
There's no evidence that consumers would not have purchased the alternatives in the market, non-infringing alternatives or non-accused alternatives in the market as opposed to Apple products.

That was not mentioned at all in the analysis that you heard here today.
In addition, there has been no apportionment for purposes of trade dress. Apple does bear that burden. Apple must show what amount of the trade dress profits are attributable to the so-called infringement, and particularly here where we're talking about, as Apple is claiming, a limited set of features that make up its trade dress.

It's not sufficient to simply go in and say, "Well, we think that you infringe our trade dress because of particular aspects of it," having a clear flat surface, for example, and then just saying, "so presumptively we get all the profits that come from the sale of those products."

And Apple has made no effort at all to apportion those, nor, under the design and patent act or the design patent damages provision, has Apple made any effort to limit the profits it's
seeking to the article to which the design is applied.

That's the plain language of that statute. They are acting -- they are assuming that the article to which the design is applied is the entire product, which is erroneous as a matter of law.

They have not factored out, for example, the technology and what drives those profits.
They are simply asking for all of them, and so that's insufficient as a matter of law as well.

And I think I mentioned it, but just to be clear on this, they have also failed to separate out infringing versus non-infringing products, or accused versus non-accused products.

There is no evidence from which the jury can make a determination for damages on a product-by-product and patent-by-patent basis. They are literally just simply saying, "I'm assuming that everything is infringing and this is the number that should be awarded."

But that is not sufficient for purposes of the damages here.

Also, there is -- the damages analysis
that was offered here today is contrary to the record evidence as well in another way, and also Apple has failed to prove this as well, which is the court knows, of course, that there are no damages prior to notice, and the notice that's required here has to be for the specific intellectual property at issue.

The court has heard testimony that during these discussions, Apple did not cite any specific design patents, no specific trade dress, and so
there was prefiling action.

That also
no notice prior to the time of the -- prior to the filing of this, this
in addition, there's been no marking. Was admitted here today. In other words, there's no evidence of
actual notice, other than with respect to the '381, as to any of the asserted intellectual property in this case. And you heard that from Mr. Teksler as a matter of fact.

And, yet, Apple's damages expert was essentially asking for damages that fly in the face of those undisputed facts.
If I may, Your Honor?

THE COURT: Please, go ahead. And I'm
going to let you have the reply as well. (Discussion off the record between
defense counsel.)

MR. ZELLER: The only other thing, your
honor, is we can provide more detail on the utility front, but I think the court sees the gist of our motion on that.

THE COURT: I do. I'm going to give you an opportunity to reply, so if you think of anything else, please raise it at that time.
Now, does anyone want to respond?

MR. MCELHINNY: Thank you, Your Honor. First of all, of course, the standard for
a Rule 50 motion is that -- it can only be granted if no reasonable jury can find in the non-moving party's favor.

Conflicting interests have to be drawn, conflicting inferences have to be drawn in our favor at this point in the case.

At the overall level, obviously we disagree. We think we have provided detailed, incredibly detailed evidence of each of our infringement claims on a claim-by claim basis.

I sat here while both Dr. Balakrishnan and Dr. Singh went through the patent claim
language and applied it to the accused devices.

THE COURT: What evidence have you
provided that Ace and some of the other smartphones were sold in the U.S.?

MR. MCELHINNY: On those three specific phones, Your Honor, the evidence was that Samsung's witness testified that they were global versions, so it's -- the rest of the versions that we're talking about were directed to the United States, but the testimony is that those, three of those devices were global versions.

THE COURT: And who was that, Mr. Denison, or who was that?

MR. MCELHINNY: That was Mr. Denison who described them as global versions.

The implication is that they were sold around the globe, and that would include the United States, at least that would be the inference at this point until somebody comes in and says that they weren't on those three particular phones.

THE COURT: Was the Gem JX 1021 one of your '381 patent slides? I think that it was. I recall it was, but --

MR. MCELHINNY: It was, Your Honor.

THE COURT: What's your evidence of
active inducement by SEC?

MR. MCELHINNY: On active inducement, the
testimony, at least to date, is that SEC sells phones directly -- well, first of all, what we got this morning were the admissions that SEC was aware of the patents. They knew about the utility patents. They knew about the design patents. They chose -- the testimony is they chose not to pay any attention to the design patents because they thought their phones didn't look the same. But the testimony was that they were aware of the design issues.

There was testimony also from the licensing person that the design issues had been specifically raised by Apple during the initial conversations.

We know that SEC manufactures the phones. We know that SEC controls the design of the phones. We know that SEC copied.

So they made the internal corporate decisions that the phones they sold would be knock-offs of the Apple products that they were selling.

We know that SEC controls the price at which they're sold, controls the price at which
they're sold to carriers. And in addition to that, directs its
subsidiaries in the United States to sell these infringing products, we would say knowing, but certainly willfully blindly of the fact that their sales infringe Apple's patent.

THE COURT: What's your response to fame being a higher standard than secondary meaning?

MR. MCELHINNY: We think -- we think that we have proved fame. The evidence that went in to show fame were the documents, including Samsung's own documents. We just looked at one that was -- I mean, we just got through looking at a document that was dated November of 2007 talking about the influences that the iPhone would have, how it would change the nature of the smartphone market, including by its beautiful design.

So Samsung's own -- and that was just one of the documents. So we have a number of Samsung documents.

If you remember back to that gravity tank survey that they did of the population, that showed it was a revolutionary design, that people immediately identified it, that they were buying it. We have the words "the wow effect" that was
introduced by Samsung -- by Apple. All of these designs, all of which
Samsung's evidence, not ours, but Samsung's evidence attributed directly.
We have the chairman and chief executive officer of Samsung saying that the iPhone established the standard for how smartphones had to be designed in the United States. That's simply admissions.

In addition to that, we have put in, obviously to the extent we were permitted to, we put in the amount of advertising that Apple had put in.

Mr. Schiller testified at great length about what is unique about Apple's advertising is this "product as hero" approach in which the advertising, by and large, is directed to the trade dress, the physical designs, the beauty of the products itself.

We then also have a large number of articles, references to movies, references to television shows, all of which make the Apple product immediately identifiable.

THE COURT: What's your response to no allocation in the damages between allegedly
infringing or accused features versus non-infringing products versus non-infringing --

MR. MCELHINNY: I believe the only evidence, the only contrary evidence in the record that I heard -- and Your Honor obviously is the judge of this, Your Honor obviously is the judge -- but the only evidence I heard was Mr. Price's question.

We just listened to Mr. Musika go through his summary and point out that, at a minimum, on the last page a royalty number is broken out for each individual patent.

In addition, there's a chart that sets out by quarter, so if there's any question about when infringement began, the jury can determine by quarter what the number of accused devices, or infringing devices would be, and it's a matter of multiplying that amount against the individual royalty in the background for the calculation of the royalty that has been made in every single case.
So Mr. Musika's report is, as he described it, a matrix that would permit the jury to come to -- to calculate any of the thousands of permutations or -- that, in theory are possible
here depending on the individual phone and the patent and the individual numbers are broken out in every case.

THE COURT: What's your response to the fact that there's, there's the assertion that there's no notice of the trade dress or design patents in that August 4th, 2010 meeting until this lawsuit was filed and until the amendment in the summer of 2011?

MR. MCELHINNY: The -- the question, you know -- well, first of all, we know as a matter of law that actual notice does not require the specific naming of products that are accused.

We also know that, under -- first of all, the courts have told us, the Supreme Court has told us that the question of notice is a fact intensive determination that turns on the particular facts of every case.

We know that the specific patent numbers are not required in order to give actual notice. That's the Chico Manufacturing Company, 817 F.Supp 979.
We also know that in the case of ongoing relationships between parties that are in a contractual relationship, the notice requirements
are reduced. So that's the background.

But we have Mr. Teksler's testimony and we have his -- well, we have -- we have it from both sides, Your Honor.

We produced Mr. Teksler, who testified about the document that he prepared. He has not yet -- because of the way the case has been divided up, this is part of that separation -- he's not yet been permitted to testify about what happened at anything other than the first meeting.

But he was permitted to testify about the document that was used at the first meeting. He pointed out that there was an intentional chapter to the background of the discussion of the design and trade dress issues that showed the phones next to each other.

And then we have the testimony from Mr., I want to say Lee, the first person I played today, who was on the other side of those discussions who testified that he was there, that Samsung -- that Apple did accuse Samsung both of infringement of utility patents, but also of copying the designs of their products.

And he testified that that specifically
happened, that Samsung listened, but it chose not to do anything about that.
So I -- actual notice is, I think -- one, it's going to be subject to how Your Honor specifically instructs the jury ultimately, but the facts right now certainly would support a verdict in our favor that Samsung had absolute notice given those first meetings and the documents that were exchanged.

THE COURT: All right. Mr. Zeller, what would you -- I don't agree with you that the Gorham test requires deception at the time of purchasing. I don't think that's what the law is.

If I disagree with you on that, then persuade me why a reasonable jury wouldn't have a legally sufficient evidentiary basis to find for Apple.

MR. ZELLER: Maybe let me clarify one thing, Your Honor. I didn't say at the point or time of the purchase. It's in the purchasing context. The Gorham standard does say that the deception has to be in the purchasing context such that the ordinary observer thinks that he or she is purchasing the design thinking it's the other.

THE COURT: Well, I guess I just don't
agree that that's what the law requires, that a person actually be deceived at the point of purchase into thinking that they are buying an allegedly infringing product.

MR. ZELLER: I'm not --

THE COURT: I don't think that's the law and I don't intend to instruct the jury that that's the law.

So if I don't agree with you on that point of the law, persuade me why otherwise there's not a legally sufficient evidentiary basis for a jury to rule in Apple's favor.

MR. ZELLER: Well, I think the short answer is i'm not trying to persuade you that that's not the law.

I think what I'm saying, Your Honor -- and bear with me and I will get the exact language -- but what it says is -- this is the Gorham test verbatim, "If, in the eye of an ordinary observer, giving such attention as a purchaser usually gives to designs, are substantially the same, if the resemblance is such as to deceive such an observer, inducing him to purchase one supposing it to be the other, the first one patented is infringed by the other."

That's what I refer to when I talk about purchasing.

THE COURT: I hear you, and I think there is law that says that.
But I think all the subsequent law says that that's not the test -- the test is not that high, that you actually have to be deceived at the time of your purchasing, that you have to be deceived. I don't think that's the law.

But anyway, let me give you an opportunity to respond to anything you want as to what Mr. Mcelhinny stated, and if you want to make any other new points, to do so.

MR. ZELLER: Your Honor, I would just to this point, because it's obviously an important one from our perspective. This is also the exact verbatim language that the Federal Circuit used in Egyptian Goddess, which is the last en banc decision by the Federal Circuit on design patents.
It specifically quoted that same language that I have just quoted.

The court also is aware that even -- that was the standard that this court applied, this exact language this court applied on the preliminary injunction, as well as most recently in
its order on claim construction. So I, I apologize if I'm -- if we're
talking past each other or if I'm misunderstanding you.

But what we're advocating simply is that this Gorham test, the language that I described which we think is a binding law --

THE COURT: Oh, I remember we had conversations about this very law at the
preliminary injunction hearing back in October. I hear you, but I don't think the test is
actual deception is what I'm trying to say. I don't think that's the requirement.

MR. ZELLER: And I think we agree on that. We're not saying that Apple has to adduce evidence of buyers who have been actually deceived.

Now, we do think that that's a relevant piece of evidence.

THE COURT: Sure, yeah.

MR. ZELLER: The Federal Circuit has certainly considered that.
But I want to be very clear, Your Honor, because we are not advocating that they need to prove actual confusion, for example, or actual deception.
But the lack of it in the real world is certainly a pertinent consideration.
But really, to then go a step further, Your Honor, to perhaps persuade you on this point, what our point is on the Rule 50 motion is that Apple's own experts, when they came in, did not apply this standard. They didn't apply the, the Gorham deception standard.

Judge Kare -- excuse me -- Dr. Kare, for example, said essentially that she just thought that the overall appearance was similar. She never uttered the words -- she never talked about even applying the Gorham standard.

Mr. Bressler, in fact, even went further. Mr. Bressler acknowledged that he did not apply deceptive similarity as the standard. He said he was instructed by counsel that that was not necessary.

And so our point is that under that standard adopted by this court, the Federal Circuit, the Supreme Court, their own experts failed to apply it and that is why we're moving on that ground.

THE COURT: Okay. Is there anything else that Mr. Mcelhinny said that you would like to
address or any other basis for a Rule 50 motion that you want to state?

MR. ZELLER: Yes, Your Honor. With respect to -- I'll just take them in order.

THE COURT: Okay.

MR. ZELLER: With respect to the Galaxy Ace, the Galaxy S i9000, and the Galaxy S II i9100, Mr. Denison actually testified to the opposite of what Apple's counsel said.

Mr. Denison specifically testified that those models were not sold in the United States. And I believe this is the citation for
it, I'll have to double check, but I believe you'll find it at pages 947 through 948 and 961 of at least one version of the transcript.

THE COURT: Let me see that, please. Who
has that?

And what's your response to that, Mr. Mcelhinny?

MR. MCELHINNY: My recollection, I believe that Mr. Denison said those products were not sold in the United States by STA, Your Honor.

Mr. Verhoeven: We've got it here, Your Honor. We'll get it.

THE COURT: Okay. Thank you.

Mr. Verhoeven: What's the page number, Mr. Zeller?

THE COURT: 947 to 961.

MR. ZELLER: 947, 948, and 961.

THE COURT: So, Mr. Mcelhinny, who did he
say sold them, then?

MR. MCELHINNY: He said they were the
global version, Your Honor, and he said that his particular company didn't sell them. That's what the evidence is, I believe.

THE COURT: Can I see the transcript, please? Just hand that to Mr. Rivera.

MR. MCELHINNY: This is my copy, Your Honor. I haven't had a chance to check this. I'm just giving you my copy of the transcript.

THE COURT: It doesn't have any notes on it, does it?

MR. MCELHINNY: No, Your Honor, it doesn't.

THE COURT: All right.

(pause in proceedings.)

MR. ZELLER: And the operative part of
this, Your Honor, the context begins on page 947, line 6, and here he's talking about certain phones.
and then the meat of the testimony begins at 947, line 25 through 948, line 13.
And he actually answered a broader question than Apple's counsel has asserted. In talking about that, he says -- he's pointing to the -- counsel is pointing him to these particular three phones, and he says, "these are the last three remaining phones at issue based on my understanding. These are global, global devices.

"Question: are any of these phones sold by any Samsung entity in the United States?

"Answer: No, they're not."

And, of course, even if it were only one entity, Your Honor, we'd still be entitled to judgment as to that entity.

THE COURT: All right. Mr. Mcelhinny, what's your response?

MR. MCELHINNY: May I point out that that -- that's Delfig, Your Honor. The quote is Delfig.

What he testified was they were not sold by Samsung entities in the United States. "In the United States" refers to STA and SEA, Your Honor.

MR. ZELLER: The question was, "Are any of these phones sold by any Samsung entity in the
United States? "Answer: no, they're not.

MR. MCELHINNY: Which leaves open the possibility that they're global sold directly by sec.

MR. ZELLER: I would also just point out, of course, that Rule 50 requires Apple to put in evidence, not possibility at this point.

They've failed to prove that any of the named defendants in this case sold any of these telephones and these mobile phones in the United States.
That's obviously a predicate for infringement, damages. And this is the sum total of the evidence on that issue.

(pause in proceedings.)

THE COURT: What's your understanding of what "global" means?

MR. ZELLER: I think he's just simply saying that they're sold in more than one market.
But he's also saying they're not sold in the United States. It's -- in other words, it's -- "global" means not the United States. That's the point of it.

THE COURT: Does that mean SEC is selling
them in Korea to the carriers?

MR. ZELLER: No, it does not, Your Honor. It means that they're not being sold for
the U.S. Market. They're not designed for the U.S. Market. They're not being sold here.

And if they were, Your Honor, Apple would be able to put in evidence from carrier sales or any other number of sources showing that they were sold, and we are at the conclusion, Apple has rested, and it did not put in evidence on those phones.

MR. MCELHINNY: And to be clear, Your Honor, even if you gave us a chance to reopen, we would not call Mr. Zeller to be the witness on this issue. But we have --

THE COURT: Well, I guess -- this is my so the first question is, "all right.
The phones that are at issue in the case.

"Answer: yes.

"Question: When you say 'mapped out by carrier, what do you mean by that?

"Answer: I just mean that, you know, for
instance, the Galaxy S Captivate, which is right next to AT&T, that phone is sold from STA to AT&T and not to any other carrier. So that's true of
all of these.

"Question: We've taken a look at those
phones, but first I'd like to turn to the next demonstrative exhibit."

What's 3585?

MR. ZELLER: If we can pull that up, please, 3585.

THE COURT: I have it right here.

MR. ZELLER: We have it on the screen, Your Honor.

THE COURT: Okay.

MR. ZELLER: So this is, for the record, SDX 3585. And it has these three bullet points, the three phones that we've been talking about, the Galaxy S i9000, Galaxy Ace, and Galaxy S II i9100.

(pause in proceedings.)

THE COURT: All right. What else do you have, Mr. Zeller?

MR. ZELLER: Then with respect to the -- another issue that has been raised which pertains to the Gem, and Apple's counsel represented they were disclosed in connection with the Local Rule 3-1 disclosures. That's not correct.
And, in fact, in the row identifying the claims that Apple accused the Gem of infringing, it
listed n/a for the '381 patent. At no time did Apple move to -- for leave to amend its infringement contentions for the Gem as required by the local rules.

THE COURT: I don't really think that's a Rule 50 argument. If you wanted to exclude this, this really should have been an objection to any specific evidence. You got all their demonstratives and all their exhibits.

MR. ZELLER: We did object, Your Honor.

THE COURT: Well, I overruled it, so I don't think that's a basis for a Rule 50.

But go on, please.

MR. ZELLER: And then with respect to the points about fame, Your Honor, the only evidence that Apple's counsel pointed to does not address the key point, which is consumer recognition.

The Ninth Circuit has been very clear that the standard is a very high one, and it has to be that the general consuming public recognizes the trademark or trade dress. It has to be a household name.

The kinds of documents that Apple's counsel has pointed to are documents by engineers extolling the alleged virtues of certain features
or saying that the iPhone has influence. Those are not statements directed to
whether or not there is U.S. consumer recognition that is sufficiently high to constitute fame, let alone for the kind of --

THE COURT: That one I think is a weaker argument based on even the deposition that came in today about the advertisements being confused.

MR. ZELLER: Um-hum.

THE COURT: That they thought a Samsung tablet advertisement was an iPad advertisement. That was a Samsung witness. I'm less persuaded by that point.

MR. ZELLER: If I could address that specific argument, Your Honor?

THE COURT: Yeah, and the Best Buy argument. Anyway, I think that's a weaker point.

I think you have a stronger point on the Ace and the i9000 and the i9100, but go ahead.

MR. ZELLER: if I could address those two documents briefly, Your Honor?

THE COURT: Yeah.

MR. ZELLER: The deep dive document that was actually discussed today is about the Tab 7.0. It's not an accused device. The court will recall
that that's the one that a limiting instruction has been given on. It can't be used for the truth of the matter asserted to even show confusion. It's only for willfulness or knowledge.

And also, I would submit that that is -- that that study does not show that the trade dress that's being asserted here is famous because, again, Your Honor, Apple is not asserting, take a look at our product overall and it's famous.
We would probably have a very, very different discussion if that's what Apple was actually asserting.

But Apple has taken this, this kind of self-serving definition of what it claims its trade dress is in order to make it closer to Samsung so it can make infringement and dilution arguments.

THE COURT: I hear you, but this is just legal sufficiency of evidence, and I think that has been met. So I don't want to waste a lot of time on this particular issue if we can.

MR. ZELLER: I understand. Thank you, Your Honor.
The next point, then, is talking about the, the damages.
And one thing, Your Honor, if I haven't
made this clear, is we are -- we're also moving on the same grounds against the damages theories as we did on the Daubert. I don't need to point -- I don't need, at this point, to elaborate further on it. I think that would be enough.

But one thing I would say is that -- specifically is that there's still no showing that this -- that the jury has sufficient information to determine damages on a product-by-product basis, and that's really what's required here.
All Apple's counsel said is, "Well, they can determine it patent-by-patent."
But that still is not sufficient.

It is Apple's burden to prove that every device they've accused of infringing, that every single one, in fact, infringes it.

And to simply say that they can find that one accused device infringes the '381, for example, and therefore they can simply award damages, or give that kind of damages number that their expert was testifying to is not sufficient.

They made no effort to break this down on a product-by-product basis and that's what they're required to do.

Damages are not a lottery. They aren't
just allowed to come in here and say, "Well, if you find the '381 is infringed, give us, you know, x hundred millions of dollars."

It has to be broken down on a product-by-product and patent-by-patent basis, and that's where we think these damages calculations, in direct response to Apple's counsel's statement, fail.

We think they fail in a variety of other ways that were not addressed by Apple. But we just don't think that even patent-by-patent is sufficient under the law.

Then with respect to the notice argument, the -- number one, Apple's counsel actually misstated the law. The law is exactly the opposite. The law specifically requires that specific rights be, be asserted or that they, that they come to the attention of the defendant.

It's not enough just to say, "I have some general rights." It does have to be with respect to a specific patent, and there's been no showing of that with respect to any patent other than the '381, and there's been no showing of that as to the, the trade dress registrations that are being asserted here.
and also, it -- Apple's counsel incorrectly recited Mr. Teksler's testimony.
Mr. Teksler, the court will recall, was not at the meetings. He has zero foundation to testify about what was supposedly said to Samsung at these meetings.

THE COURT: Well, he wasn't at the August 4th, 2010 meeting, but he did say he had subsequent conversations with Samsung employees as the director of I.P. Licensing.

MR. ZELLER: But he also acknowledged that he never identified specific patents or specific rights in those other meetings.

The only thing he had -- the only thing he was trying to assert was he had created this document for the first meeting, and they were putting those up and they -- the court will recall that they made quite a showing for the jury of these particular comparisons and the like trying to get across the supposed notice.

But on cross-examination, he admitted that, number one, he wasn't at that meeting; and number two, at no time did he have any knowledge that Samsung was put on notice as to those specific rights. And that was his testimony.

THE COURT: All right. Let me hear -- we've been arguing this Rule 50 motion for almost an hour. We started at 1:42. It's now 2:38.

Let me hear -- I want to hear from Apple on this issue of the Ace, i9000, i9100. The only testimony is that these three phones are global, they're global devices, but then "Are any of these products sold by any Samsung entity in the U.S.?"

"No, they're not."

So tell me why I shouldn't grant Samsung's Rule 50 motion as to those three products.

MR. MCELHINNY: The question is whether or not this jury can infer from testimony that this was a global product, that it was sold in the United States, "global" meaning across the globe.

And that is the testimony.

The contrary testimony to that, or the qualification on that, is not -- it doesn't cover all the Samsung entities.

THE COURT: Well, it says "any Samsung
entities."

MR. MCELHINNY: "In the United States," Your Honor, "any Samsung" -- and there are only two -- only two of the three entities are in the
United States. The company that sells globally --

THE COURT: oh, I see what you're saying. You're saying the "any Samsung entity in the U.S." Refers to the two U.S. subsidiaries and not to --
rest --

MR. MCELHINNY: It does, because the

THE COURT: I see.

MR. MCELHINNY: Because the rest of the testimony, which is consistent, is that global -- that neither of the two U.S. entities are responsible for global sales.

THE COURT: Oh. All right.

MR. ZELLER: If I may, Your Honor? There's still no evidence that it's been
sold by anybody. We've been parsing as to whether it conclusively shows that they did not -- they've now admitted that at least it shows it as to the two U.S. entities, so judgment would have to be entered as to those two entities for that reason alone.

But even if one were to interpret this -- and this is, I don't think it's a fair
interpretation -- but even if they did interpret it, it was interpreted to mean that they were only
the U.S. entities. The fact is that Apple has no evidence
that any of those phones were sold by SEC in the United States, either.
It wasn't our burden -- in other words, what I'm trying to say is it wasn't our burden to come forward and negate the elements. They still have to prove them, even if that doesn't negate it as to that one entity.

THE COURT: I hear you.

Okay. Are you conceding, then, that STA and other U.S. subsidiaries do not sell the Ace, the i9000, and the i9100 in the United States?

MR. MCELHINNY: I am conceding that we have not put on any evidence of that.

THE COURT: All right.

MR. MCELHINNY: Of those two entities, Your Honor.

THE COURT: All right. So I'm granting the Rule 50 motion as to the -- let's get the full name.
Can you, Mr. Zeller, give me the full name just so I get the product names correct, please.

THE COURT: All right. So I'm granting Samsung's Rule 50 motion as to these three products as to
as to Samsung Telecommunications America LLC and
Samsung Electronics America, Inc., but denying the motion as to Samsung Electronics Company Limited. Now, I am not going to comment word for
word on each of the issues that has been raised. It's really for the jury to make a determination and -- so all I'm going to say is that, you know, I have reviewed all of the exhibits that have been admitted into evidence and have heard all the testimony that's been given and a Rule 50 motion just requires the court to make a determination of whether a reasonable jury would have a legally sufficient evidentiary basis to find for Apple, and if not, as a matter of law, that all of these claims should be taken away from the purview of the jury and judgment should be entered as a matter of law in favor of Samsung.
That's the question that's before the court, not -- it's just simply those issues.

And based on what this court has seen in terms of the admitted exhibits and the testimony, I'm denying the motion, with the exception of those three products as to Samsung Telecommunications America, LLC and Samsung Electronics America, Inc. Because I do find that a reasonable jury would have a legally sufficient evidentiary basis to find for
Apple on the claims. So I'm denying the motion for judgment as
a matter of law and will let the jury ultimately decide these questions.

Now, obviously we could go through all of the evidence, but I don't think that's necessary and I do not want any potential taint of this jury if I go through, you know, witness by witness or document by document.

But obviously based on everything I've seen, I think that there is a legally sufficient evidentiary basis for a reasonable jury to make that finding.

So anything else on Rule 50? It's now 2:45, so we've been going a little over an hour on the argument for this motion.

Should we just take our break now and then start with Samsung's case after the break? That might make sense.

Over an hour. I doubt she really saved time this way rather than reading 6 pages of briefs from the two parties. At first she not only tells Samsung to do it orally instead, she offers him only five minutes. Five minutes. For a case where Apple was asking for a couple of billion dollars in damages and the claims were complicated, involving a dizzying array of devices to boot. When he points that out, she relents and says he can take whatever time he needs to make his record. When judges say that, though, it often means they're already in mind to deny you, and your hope is in an appeal. In this case, she mostly did deny.

And while both sides did a fabulous job of representing their clients' interests without notice, they probably could have done a more effective job in writing, because as you can see, all of them, the judge included, were scrambling to read the transcripts to try to establish a point, and by my reading, the judge didn't notice the full implications of what they found. I suspect she too would have done better if she had read the briefs and had time to read the transcripts at leisure.

She likely would respond, "Leisure? What's that?" And that is a valid point, that judges are overworked. But both judges on this case seemed to be greatly annoyed by the zeal of the parties' lawyers and resented the extra burden on them to deal with all the motion practice. But that is what happens with well-heeled parties with excellent law firms, and it seems unreasonable to hold it against them.

What am I saying, "them"? In both instances, the annoyance was expressed not against both sides equally, but only against Samsung, first by the magistrate and here by the presiding judge. Was Samsung the only one filing motions?

To agree to let the Samsung brief something as significant as a Rule 50 motion and then suddenly change her mind, so they had to do their arguments on their feet with no advance notice... well, it doesn't sit right with me. Samsung had relied on her earlier ruling that they could file in writing, after all.

So, here is the text, and you'll have to forgive me, but I didn't have time to change the PDF, which is in all caps, into more normal text, but if anyone wishes to do that, please send it to me and I'll plug it in. Meanwhile, it's readable enough and more importantly, it's searchable. But more than usual, I urge you to rely on the PDF for anything that matters. There are, for sure, bound to be mistakes in the text version introduced by the tools used to convert, which we'll follow up and correct as you catch them and let me know about them, and meanwhile a volunteer is trying to figure out a script to make this process better, so it doesn't take me two or three days just to get one flawed transcript done:

*************************

United States District Court
Northern District of California
San Jose Division

ON YOUR EXHIBIT LIST -- THANK YOU FOR FILING THAT -- IT WAS A LITTLE BIT UNCLEAR -- I MEAN, WE CAN TAKE THE PREFIXES OFF ONCE THE LIST IS FINALIZED, BUT IT WOULD BE HELPFUL IF YOU LEFT THE PREFIXES ON, BECAUSE THAT MORE EASILY MAPS ON TO MY LIST, SO IF YOU WOULD KEEP, LIKE, PX OR DX OR SDX

5

1994

OR PDX.

AND I WASN'T SURE ON NUMBER 3 AND 4 WHERE YOU JUST SAY APPLE AND SAMSUNG SMARTPHONES, APPLE AND SAMSUNG TABLETS, WHAT WERE THOSE? BECAUSE I KNOW YOU HAVE THE JX ACTUAL PHONES, YOU KNOW, STARTING ON PAGE 6.

MS. KREVANS: I THINK I KNOW THE ANSWER, YOUR HONOR. IF THOSE WERE PX 3 AND 4, THOSE ARE PHOTO COMPILATIONS, ONE ARE ACCUSED DEVICES AND ONE ARE APPLE PRODUCTS. I'D HAVE TO LOOK THEM UP TO MAKE SURE WHICH IS WHICH.

THE COURT: ALL RIGHT. IF YOU WOULD, PLEASE, ON THIS EXHIBIT NUMBER INCLUDE THE PREFIXES, THEN I CAN VERIFY IT, AND THEN WE CAN ALWAYS TAKE THOSE OFF WHEN THIS GOES TO THE JURY.
AND WHEN CAN YOU UPDATE THESE LISTS? THE DEMONSTRATIVE LIST ONLY GOES THROUGH LAST TUESDAY AND THE EXHIBIT LIST GOES THROUGH LAST THURSDAY.

MR. JACOBS: YOUR HONOR, I THINK BY FIRST THING TOMORROW MORNING WE COULD GET THAT DONE.

7

1995

THE COURT: OKAY. THANK YOU.

MR. JACOBS: I KNOW THE PARTIES HAVE -- UNDERSTAND THAT WE NEED TO BE SYNCHING THIS UP.

THE COURT: EVERY DAY WOULD BE GREAT, IF WE COULD HAVE JUST A NEW LIST TO MAKE SURE THERE'S NO DISAGREEMENT ABOUT WHAT'S BEEN ADMITTED THAT DAY.

OKAY. SO WHY DON'T WE SAY -- CAN YOU UPDATE THAT TOMORROW AT 8:00?

MR. JACOBS: YES, YOUR HONOR.

THE COURT: OKAY. THANK YOU. AND WHY DON'T WE JUST HAVE THAT DAILY?

SO WHATEVER'S BEEN ADMITTED THE PREVIOUS DAY, WE'LL ALL BE IN AGREEMENT AND THERE'S NO PROBLEM.

AND WHEN CAN I HAVE THE JURY INSTRUCTIONS? CAN WE SAY BY 6:00 O'CLOCK TODAY?

MR. JACOBS: YES, YOUR HONOR.

THE COURT: OKAY. THANK YOU.

OKAY. NOW, WHAT'S -- WHAT -- FOR THE
ACTUAL EXHIBITS THAT ARE BEING SHOWN TO THE WITNESSES, ARE YOU ALL THEN, ONCE THE WITNESS IS LEAVING, KEEPING THOSE IN YOUR SEPARATE OFFICIAL EXHIBIT CARTS? OR --

MR. JACOBS: WE'RE JUST TAKING THE BINDERS BACK, YOUR HONOR. ARE YOU -- ARE YOU --

8

1996

I'M NOT SURE I UNDERSTAND EXACTLY THE QUESTION.

ARE YOU ASKING WHAT THE ACTUAL -- HOW DO
WE MAKE SURE THE ACTUAL EXHIBITS SYNCH UP WITH YOUR SET?

THE COURT: YEAH. I JUST -- SINCE THERE HAS BEEN THIS DISPUTE NOW ABOUT THE DEVICES, I JUST DON'T WANT THERE TO BE ANY DISPUTE ABOUT THE DOCUMENTS THAT THE WITNESS IS ACTUALLY TESTIFYING ABOUT, SO IT MAY BE BEST THAT WE TAKE THOSE AS WELL.

I MEAN, THERE HASN'T BEEN ANY ISSUE SO FAR, BUT JUST IN CASE, WOULD IT BE, YOU KNOW, IN AN ABUNDANCE OF CAUTION FOR US TO DO THAT AS WELL, IN ADDITION TO THE DEVICES?

MS. MAROULIS: THAT'S FINE. WE'LL SUBMIT TO THE COURT THE PAPER EXHIBITS EVERY DAY AFTER COURT.

MR. JACOBS: I THINK THAT WHAT WE SHOULD DO FIRST IS WE SHOULD LOOK AT THE EXHIBIT LIST AND SYNCH UP NOT JUST THE LIST, BUT WHAT DOCUMENT IS ASSOCIATED WITH THE LIST AND MAKE SURE THAT WE HAVE AN AGREEMENT ON THAT, THAT WILL GO RETROSPECTIVELY.

AND THEN PROSPECTIVELY, IF YOU WOULD LIKE THE WITNESS BINDERS TO BE LEFT WITH THE COURT, THAT WOULD BE FINE.

9

1997

THE COURT: NOT THAT I WANT US TO ACCUMULATE MORE BECAUSE WE'RE LIMITED ON SPACE, BUT JUST IN THE EVENT THAT THERE'S ANY DISPUTE, IT MIGHT BE BEST FOR US TO HAVE THAT.

I WOULD LIKE YOU ALL TO -- I'M HOPING THAT EVIDENCE CONCLUDES BY FRIDAY AND THAT WE HAVE OUR JURY INSTRUCTION CONFERENCE MONDAY AND THEN, AT THE LATEST, THE JURY BE INSTRUCTED TUESDAY MORNING AND HAVING THE CLOSINGS ON TUESDAY.

I THINK THAT'S REALISTIC BASED ON THE NUMBER OF HOURS EACH PARTY HAS LEFT, UNLESS YOU DISAGREE.

DOES THAT SOUND REALISTIC?

MR. JACOBS: SOUNDS POSSIBLE, YOUR HONOR. IT COULD BE THAT THERE'S SOME SPILL OVER
ON TO MONDAY AS WE CALCULATE IT DEPENDING ON HOW FAST WE MOVE ALONG.

THE COURT: EITHER WAY, I WOULD LIKE TO HAVE CLOSINGS ON TUESDAY AND EITHER HAVE THE JURY START DELIBERATING ON TUESDAY OR WEDNESDAY MORNING.
SO IN ORDER FOR US TO MEET THAT SCHEDULE, YOU KNOW, WE'LL WORK ON THE JURY INSTRUCTIONS RIGHT AWAY TO GET, HOPEFULLY, A DRAFT SET OF INSTRUCTIONS WHICH YOU CAN THEN ARGUE, BUT AS CLOSE TO DONE AS POSSIBLE BY MONDAY.

10

1998

BUT THEN I WOULD LIKE YOU ALL TO BE IN TOTAL AGREEMENT AS TO WHAT THE OFFICIAL SET OF EXHIBITS IS THAT ARE GOING TO THE JURY BECAUSE WE MAY NEED TO GIVE THEM THAT FULL SET BY TUESDAY.

MR. JACOBS: THAT MAKES SENSE, YOUR
HONOR.

THE COURT: SO IF YOU WOULD, PLEASE, SINCE THUS FAR YOU'VE TAKEN THE EXHIBITS, IF YOU JUST COME TO AN AGREEMENT -- I MEAN, I DON'T THINK THERE SHOULD BE, ON THE PAPER DOCUMENTS AS THERE IS WITH THE PHONES, BUT IF YOU CAN JUST REACH AN AGREEMENT AS TO WHAT'S COME IN THAT DAY, IF YOU ALL HAVE ANY DISPUTES AS TO WHETHER THAT'S THE VERSION THAT THE WITNESS LOOKED AT, LET ME KNOW.

MR. JACOBS: YOU BET, YOUR HONOR.

THE COURT: ALL RIGHT. THEN WHAT ELSE? I'VE RULED ON TWO SETS OF OBJECTIONS AS TO MR. MUSIKA.

MS. MAROULIS: YOUR HONOR --

THE COURT: FRIDAY NIGHT AND SATURDAY
NIGHT.

MS. MAROULIS: ONE BRIEF QUESTION. IN YOUR FRIDAY NIGHT ORDER, YOU ALLOWED APPLE TO ASK ONE LEADING QUESTION, AND WE ASSUME THAT THEY CAN ONLY ANSWER YES OR NO. IS THAT RIGHT?

11

1999

THE COURT: ONLY YES OR NO.

MS. MAROULIS: THANK YOU.

THE COURT: SO WE HAVE MR. TEKSLER THIS MORNING?

MS. MAROULIS: YES.

MR. JACOBS: A HOUSEKEEPING MATTER.

THE COURT: YES.

MR. JACOBS: WE MET CLOSE YESTERDAY UNDER
YOUR 10:30 DEADLINE FOR HIGH PRIORITY OBJECTIONS AND RESPONSES.

DO WE NOW SHIFT TO THE 1:00 O'CLOCK SCHEDULE FOR THE WEEK? THAT WAS THE ORIGINAL SCHEDULE WE SET FOR THOSE FILINGS.

THE COURT: WELL, I WOULD -- I WOULD PREFER GOING BACK TO 8:00, BUT IS THAT JUST NOT DOABLE?

MR. JACOBS: NOT DOABLE, YOUR HONOR.

THE COURT: SO CAN WE COMPROMISE THEN AT
10:30?

MR. JACOBS: JUST TO BE CLEAR, THIS IS 10:30 TODAY FOR WITNESSES TOMORROW?
10:30?

THE COURT: YES, CAN WE COMPROMISE AT 10:30?

MR. JACOBS: UNDERSTOOD.

THE COURT: BECAUSE AS IT IS, WE'RE

12

2000

FILING OUR ORDERS AT 11:00 P.M., AND IF YOU DON'T GIVE IT TO US UNTIL 1:00 AND WE DON'T SEE IT UNTIL 4:00, I'M NOT GOING TO GET TO IT UNTIL 2:00 O'CLOCK IN THE MORNING.

I HAVE MUCH SMALLER RESOURCES THAN BOTH SIDES DO, SO I NEED THAT TIME. SO 10:30 FOR ANY FOR TOMORROW, PLEASE.

MR. JACOBS: AND THEN GOING FORWARD I THINK --

THE COURT: AND THEN GOING FORWARD, 10:30 EVERY MORNING FOR THE NEXT DAY'S WITNESSES.

AS A MATTER OF PROCEDURE, WE NEED TO MAKE A RULE 50 MOTION FOR JUDGMENT, AND I CONFERRED WITH THE OTHER SIDE -- THIS IS MY USUAL PRACTICE ON THIS TO AVOID DELAY -- IS I'LL ORALLY MAKE -- I'LL JUST SAY, "YOUR HONOR, I MOVE UNDER RULE 50." NOTHING MORE.

13

2001

AND THEN WE WOULD SUBMIT, AS SOON AS WE CAN THEREAFTER, MAYBE IN A COUPLE OF DAYS, A BRIEF THAT SETS OUT, FOR THE AVOIDANCE OF WAIVER AND WHATNOT, THE ARGUMENTS THAT WE WANT TO PRESERVE ON THAT MOTION, AND IF IT'S ACCEPTABLE TO YOUR HONOR, I THINK THE OTHER SIDE WOULD AGREE THAT, AND
STIPULATE THAT FILING THAT BRIEF IN A DAY OR TWO WOULD NOT
CONSTITUTE A WAIVER.

SO WE WOULD SUGGEST THAT, YOUR HONOR.

MR. MCELHINNY: OUR POSITION IS WHATEVER WORKS FOR YOU WORKS FOR US, YOUR HONOR.

WE'RE A LITTLE WORRIED ABOUT GETTING BACK LOADED HERE. BUT IF -- IF YOU -- IF YOU ACCEPT THEIR PROPOSAL, WE HAVE NO OBJECTION TO IT.

THE COURT: SO THIS IS GOING -- AND THEN I ASSUME YOU'RE GOING TO WANT TO FILE AN OPPOSITION AND THEN YOU'RE GOING TO FILE A REPLY?

MR. VERHOEVEN: THIS IS MOSTLY -- WE NEED TO AVOID ANY ARGUMENTS OF WAIVER. WE HAVE THESE REQUIREMENTS THAT WE MAKE THESE IF WE WANT TO PRESERVE THEM FOR LATER.

SO CAN WE WORK OUT A SCHEDULE FOR THAT? WHEN WOULD YOU LIKE TO FILE THAT, MR. VERHOEVEN?

MR. VERHOEVEN: WE COULD FILE THAT TOMORROW, YOUR HONOR.

THE COURT: OKAY. SO TOMORROW IS THE 14TH. IS THAT RIGHT?
OKAY.

THEN WHEN ARE YOU GOING TO FILE YOUR THREE PAGES OR LESS?

MR. MCELHINNY: THE DAY AFTER, YOUR
HONOR.

THE COURT: OKAY. SO THAT WOULD BE 8-15, AND THEN NO REPLY.

MR. VERHOEVEN: THAT'S FINE, YOUR HONOR.

THE COURT: ALL RIGHT. SO JUST ORALLY MAKE YOUR RULE 50 MOTION. I WON'T RULE ON IT. I'LL TAKE CARE OF IT AFTER I SEE THE BRIEFS. THAT WAY WE DON'T HAVE TO DO ANY OF THIS IN FRONT OF THE

16

2004

JURY AND THAT WAY WE DON'T LOSE ANY TIME DURING THE DAY.

MR. MCELHINNY: AND AS I DID AGREE WITH MR. VERHOEVEN, WE WILL NOT RAISE WAIVER -- HIS ARGUMENTS ARE GOING TO BE PRESERVED IN HIS MOTION, WHATEVER IS IN HIS WRITTEN MOTION.

MR. VERHOEVEN: THANK YOU, YOUR HONOR.

THE COURT: ALL RIGHT. WHAT ELSE? ANYTHING ELSE THAT WE SHOULD COVER? I GUESS WE CAN BRING OUR JURY IN A LITTLE EARLY.

MS. MAROULIS: THE ONLY THING IS MY REAL TIME DOESN'T WORK.

THE COURT: MINE IS STUCK AS WELL.

(PAUSE IN PROCEEDINGS.)

MR. VERHOEVEN: YOUR HONOR, THERE IS ONE
OTHER THING, BUT I THINK WE CAN ADDRESS IT AT A LATER TIME. MR. GOLDSTEIN, MY PARTNER, WOULD LIKE US TO USE A COUPLE MINUTES OF OUR TIME TO ADDRESS ONE OF THE OBJECTION RULINGS ON DR. YANG.

THE COURT: DR. WHO, WHICH ONE?

MR. VERHOEVEN: DR. YANG, BUT HE'S NOT GOING TO BE UP FOR A LONG TIME, SO MY SUGGESTION IS WE GET GOING AND FIND A SPOT CLOSER IN TIME.

THE COURT: IS YOUR ORDER OF WITNESSES SIMILAR, LARGELY, ACCORDING TO YOUR LIST?

17

2005

MS. MAROULIS: IT'S THE ONE WE FILED, YESTERDAY, YOUR HONOR, AROUND NOON.

THE COURT: OKAY. THANK YOU.
ALL RIGHT. MR. RIVERA, WOULD YOU PLEASE BRING IN OUR JURY?

THE CLERK: YES, YOUR HONOR.

(WHEREUPON, THE FOLLOWING PROCEEDINGS WERE HELD IN THE PRESENCE OF THE JURY:)

THE COURT: ALL RIGHT. GOOD MORNING AND

18

2006

WELCOME BACK. THE TIME IS NOW 9:05.

GO AHEAD, PLEASE, WITH THE CROSS OF
MR. TEKSLER. SIR, YOU ARE STILL UNDER OATH.

BORIS TEKSLER,

BEING CALLED AS A WITNESS ON BEHALF OF THE PLAINTIFF, HAVING BEEN PREVIOUSLY DULY SWORN, WAS FURTHER EXAMINED AND TESTIFIED AS FOLLOWS:

CROSS-EXAMINATION (RESUMED)

BY MS. MAROULIS: Q: GOOD MORNING, MR. TEKSLER.

A: GOOD MORNING.

Q: WE'RE GOING TO CONTINUE WITH THE DISCUSSION OF THE ROYALTIES THAT WE STARTED LAST WEEK.
DO YOU REMEMBER THAT?

A: I DO.

Q: LAST WEEK YOU TESTIFIED THAT NO ONE HAS EVER PAID APPLE A ROYALTY OF $2.02 PER UNIT FOR THE '381 PATENT. IS THAT STILL CORRECT?

A: YES, THAT'S CORRECT. THERE'S NO LICENSE FOR THE '381.

Q: AND NO ONE HAS EVER PAID APPLE A ROYALTY OF $2.02 FOR THE '163 PATENT; IS THAT CORRECT AS WELL?

A: YES, THAT'S CORRECT.

Q: NO ONE HAS EVER PAID APPLE A ROYALTY OF $3.10

19

2007

FOR THE '916 PATENT AT ISSUE; IS THAT CORRECT?

A: YES, THAT'S CORRECT.

Q: AND NO ONE HAS EVER PAID APPLE A ROYALTY OF $24 DOLLARS PER UNIT FOR ANY OF THE DESIGN PATENTS AT ISSUE IN THIS CASE; IS THAT RIGHT?

A: YES, THAT'S CORRECT.

Q: FURTHERMORE, NO ONE HAS EVER PAID APPLE A ROYALTY OF $24 A UNIT FOR ALL FOUR DESIGN PATENTS AT ISSUE IN THIS CASE; RIGHT?

A: YES, THAT'S CORRECT.

Q: AS A LICENSING PROFESSIONAL, SIR, ARE YOU FAMILIAR WITH THE CONCEPT OF MARKING? A I AM.

Q: MARKING IS PUTTING THE PATENT OR REGISTERED TRADE DRESS NUMBER ON YOUR PRODUCT; CORRECT?

A: THAT'S ONE INSTANCE, YES.

Q: AND THE PURPOSE OF THAT IS TO LET EVERYONE IN THE MARKET KNOW THAT THE PATENTEE HAS RIGHTS TO A PARTICULAR PATENT; RIGHT?

A: YES, I BELIEVE THAT'S CORRECT.

Q: AND IT IS CORRECT, SIR, THAT APPLE DOES NOT MARK ITS IPHONES; RIGHT?

A: YES, I BELIEVE THAT'S CORRECT.

Q: IT'S ALSO CORRECT THAT APPLE DOES NOT MARK ITS IPADS; IS THAT RIGHT?

20

2008

A: THAT'S CORRECT.

Q: ISN'T IT CORRECT, SIR, THAT PRIOR TO THE FILING OF THIS LAWSUIT, APPLE NEVER TOLD SAMSUNG
THAT IT NUMBER?

A: WE PATENTS NUMBERS
PATENTS

Q: MR. TEKSLER, PLEASE ANSWER MY QUESTION. IS IT CORRECT THAT APPLE NEVER SPECIFIED ANY DESIGN PATENTS TO SAMSUNG THAT IT ALLEGES IN THIS CASE PRIOR TO THE LAWSUIT?

A: ANY ENUMERATED NUMBER? IS THAT WHAT YOU'RE SAYING?

Q: YES, MR. TEKSLER.

A: YES, I AGREE.
WAS INFRINGING SPECIFIC DESIGN PATENTS BY
TOLD THEM THAT THEY INFRINGED DESIGN OF OURS, BUT WE DIDN'T ALLOCATE THOSE TO THEM, THAT'S CORRECT.

MS. MAROULIS: OKAY. I DON'T HAVE ANY FURTHER QUESTIONS FOR YOU AT THIS TIME.

THE COURT: OKAY. THE TIME IS NOW 9:07. IS THERE ANY REDIRECT?

MR. MUELLER: PLEASE, YOUR HONOR.

THE COURT: OKAY. GO AHEAD, PLEASE.

MR. MUELLER: MAY I PROCEED, YOUR HONOR?
AS A MATTER OF FACT, SEVERAL OF THOSE HADN'T YET ISSUED.

21

2009

THE COURT: PLEASE, GO AHEAD.
REDIRECT EXAMINATION

BY MR. MUELLER:

Q: JUST A FEW QUESTIONS FOR YOU. FIRST, MS. MAROULIS ASKED YOU SOME QUESTIONS A MOMENT AGO WITH RESPECT TO LICENSING OF APPLE'S PATENTS.
DO YOU HAVE THOSE PATENTS IN MIND?

A: I DO.

Q: THE '381, THE '163?

A: YES.

Q: THE '916?

A: YES.

Q: AND THE DESIGN PATENTS. A CORRECT.

Q: NOW, LET'S BE CLEAR. HAS APPLE LICENSED ANY OF THOSE PATENTS ON A STANDALONE BASIS AS INDIVIDUAL PATENTS? A NO.

MS. MAROULIS: OBJECTION. LEADING.

THE COURT: OVERRULED.

THE WITNESS: SORRY. NO, IT'S NOT OUR
CUSTOMARY PRACTICE TO ENUMERATE SPECIFIC DESIGN PATENTS, OR SPECIFIC PATENT NUMBERS.
IN GENERAL, YOU COME UP WITH A PRETTY BROAD CATEGORY OF PATENTS IN A CROSS-LICENSE. THAT

22

2010

WAY BOTH PARTIES KNOW THAT THEY HAVE SOME PEACE.

BY MR. MUELLER:

Q: NOW, MR. TEKSLER, LAST WEEK YOU EXPLAINED TO THE JURY HOW APPLE TREATS DIFFERENT CATEGORIES WITHIN ITS PATENT PORTFOLIO.
CAN YOU REMIND US, WHICH CATEGORY DO THESE PATENTS FALL INTO?

MS. MAROULIS: OBJECTION. BEYOND THE SCOPE OF CROSS.

MR. MUELLER: YOUR HONOR, THESE ARE EXACTLY THE PATENTS THAT MS. MAROULIS JUST ASKED ABOUT.

THE COURT: OVERRULED. GO AHEAD.

THE WITNESS: SO ALL THESE PATENTS ARE IN
APPLE'S UNIQUE USER EXPERIENCE AND NOT ONES THAT WE WOULD LICENSE.

BY MR. MUELLER:

Q: NOW, MS. MAROULIS ASKED YOU SOME QUESTIONS ABOUT THE LIMITED CIRCUMSTANCES IN WHICH APPLE HAS LICENSED ITS DESIGN PATENTS. THOSE WERE QUESTIONS ASKED LAST FRIDAY.

A: I DO.
DO YOU RECALL THAT?

MS. MAROULIS: OBJECTION. ARGUMENTATIVE.

23

2011

THE COURT: OVERRULED.

BY MR. MUELLER:

Q: NOW, MR. TEKSLER, ARE YOU FAMILIAR WITH APPLE'S LICENSE WITH MICROSOFT?

A: I AM.

Q: DOES THAT LICENSE COVER APPLE'S DESIGN PATENTS?

A: IT DOES.

Q: CAN YOU EXPLAIN TO THE JURY THE FORM OF THE LICENSE GRANT?

A: SURE. SO APPLE AND MICROSOFT'S CROSS-LICENSE DOES COVER THE DESIGN PATENTS.
HOWEVER, WE TOOK SPECIAL PROHIBITIONS FOR BOTH PARTIES SO THAT THERE'S WHAT I TERM AN ANTI-CLONING PROVISION IN THE AGREEMENT SO THAT WE WOULDN'T COPY EACH OTHER'S PRODUCTS.
AND SO EVEN THOUGH THERE'S PEACE BETWEEN THE COMPANIES WITH RESPECT TO THE PATENTS AS A WHOLE, THERE'S A CLEAR ACKNOWLEDGMENT THAT THERE'S NO COPYING WITH THIS ANTI-CLONING PROVISION.

Q: AND MR. TEKSLER, TO BE VERY CLEAR, WHAT RIGHTS WERE NOT GIVEN TO MICROSOFT WITH RESPECT TO THESE DESIGN PATENTS?

MS. MAROULIS: OBJECTION. LEADING, BEYOND THE SCOPE OF CROSS.

24

2012

THE COURT: OVERRULED. GO AHEAD.

THE WITNESS: SORRY. CAN YOU REPEAT THE
QUESTION?

BY MR. MUELLER:

Q: SURE. WHAT RIGHTS WERE NOT GIVEN TO MICROSOFT WITH RESPECT TO THESE DESIGN PATENTS?

A: SO THERE WAS NO RIGHT WITH RESPECT TO THESE DESIGN PATENTS TO BUILD CLONE PRODUCTS OF ANY TYPE IN THESE, AND THERE WAS A LIMITED CAPTURE ASSOCIATED WITH THEM AS WELL.

Q: NOW, HOW DOES THIS PROVISION IN THE MICROSOFT LICENSE COMPARE WITH HOW APPLE GENERALLY TREATS ITS USER EXPERIENCE PATENT?

A: IT'S COMPLETELY CONSISTENT. THESE ARE AREAS THAT WE DO NOT WANT PEOPLE TO COPY US.

Q: NEXT TOPIC, IF WE CAN SHIFT GEARS AND FOCUS ON PX 51, WHICH IS AN EXHIBIT THAT MS. MAROULIS ASKED YOU ABOUT. THIS IS FROM OCTOBER 5TH, 2010.
DO YOU RECALL MS. MAROULIS HIGHLIGHTED CERTAIN LICENSE TERMS THAT APPLE PROPOSED?

A: YES.

Q: WHY WAS APPLE OFFERING THESE TERMS TO SAMSUNG?

A: WELL, WE WERE TRYING VERY HARD TO COME UP WITH AN AMICABLE RESOLUTION WITH SAMSUNG, AND CONSISTENT

25

2013

WITH OUR STRATEGY OF LICENSING, WHICH IS WE WANT TO GET PROPERLY COMPENSATED FOR THAT WHICH THEY INFRINGE; AND WE WANTED THEM TO RESPECT AND PROTECT OUR UNIQUE USER EXPERIENCE.
AND THAT'S EXACTLY WHAT WE WERE TRYING TO DO IN THIS PRESENTATION.

A: ABSOLUTELY NOT. WE WERE VERY CLEAR IN THE DISCUSSIONS WITH SAMSUNG THAT WE WEREN'T OFFERING THEM A LICENSE TO EVERYTHING, AND WE SAID THAT WE STILL HAD YET TO DISCUSS SOME VERY SPECIFIC, WHAT WE SORT OF TERMED UNTOUCHABLES, IF YOU WILL.
AND IN RETURN, WHAT WE REALLY WANTED TO DO AT THIS STAGE OF THE DISCUSSIONS WAS GET THEM TO ACKNOWLEDGE THEY NEEDED A LICENSE AND TO STOP COPYING AND TO PAY US APPROPRIATELY FOR THE RIGHTS THAT THEY DO NEED.

Q: AND LET'S BE CLEAR. WHAT WERE THE UNTOUCHABLES?

A: THE UNTOUCHABLES WERE THE SPECIFIC PROPRIETARY FEATURES THAT NEEDED TO BE ADDRESSED WHICH IS ON

26

2014

ONE OF THESE SLIDES.

Q: WHAT TYPES OF PATENTS WERE THOSE, MR. TEKSLER?

A: THOSE WERE THE ONES THAT WE'VE TALKED ABOUT TODAY AS THE APPLE UNIQUE USER EXPERIENCE PATENTS.

Q: WOULD THOSE A COMPLETELY.

Q: LAST TOPIC. AUGUST 4TH, 2010
INCLUDE THE ASSERTED PATENTS?
LET'S LOOK AT PX 52, WHICH IS THE PRESENTATION.
NOW, DO YOU RECALL WHEN MS. MAROULIS ASKED YOU SOME QUESTIONS ABOUT WHETHER THIS PRESENTATION RAISED DESIGN ISSUES?

A: YES.

Q: LET'S TAKE A LOOK AT PAGE 17 IF WE COULD.
MR. TEKSLER, WHAT DO WE SEE HERE?

A: SO I THINK, AS I TESTIFIED EARLIER, THIS IS WHAT WE WERE -- THIS IS A CHAPTER ENTITLED "SAMSUNG COPYING IPHONE," AND WE TALKED ABOUT THE REMARKABLE SIMILARITY OF THE TWO PRODUCTS, YOU KNOW, THAT WE LOOKED AT THEM SIDE BY SIDE AND WE TALKED ABOUT THE OVERALL DESIGN, WE TALKED ABOUT THE BEZEL, WE TALKED ABOUT THE UNIQUE LAYOUT OF THE SCREEN --

MS. MAROULIS: OBJECTION, YOUR HONOR. THIS IS BEYOND YOUR HONOR'S RULING.
THE WITNESS IS NOT ALLOWED TO TESTIFY ABOUT THE ACTUAL MEETING AND HE'S GOING BEYOND THE

27

2015

EXHIBIT.

MR. MUELLER: YOUR HONOR, I'M ASKING ABOUT THE ACTUAL DOCUMENT, AND I CAN MAKE THAT CLEAR IF YOU'D LIKE.

THE COURT: WHY DON'T YOU CLARIFY THAT?

MR. MUELLER: SURE.

Q: MR. TEKSLER, I JUST WANT TO MAKE SURE THAT WE'RE FOCUSSED ON THIS PAGE OF THIS DOCUMENT, THE AUGUST 4TH, 2010 PRESENTATION.
SO STICKING WITH THIS DOCUMENT, CAN YOU EXPLAIN WHAT WE SEE HERE?

A: CERTAINLY. SO THE TALKING POINTS THAT --

MS. MAROULIS: OBJECTION. LEADING, YOUR
HONOR.

MR. MUELLER: MY QUESTION WAS, CAN YOU EXPLAIN WHAT WE SEE? THAT'S NOT LEADING.

THE COURT: HE'S TALKING ABOUT TALKING POINTS. I'M GOING TO SUSTAIN THE OBJECTION.

BY MR. MUELLER:

Q: LET'S TURN THE PAGE TO PAGE 18. WHAT DO WE SEE HERE?

MS. MAROULIS: OBJECTION, YOUR HONOR.

THE WITNESS: THIS WAS ANOTHER PAGE THAT I CREATED THAT TALKED ABOUT REMARKABLE SIMILARITY OF THE OVERALL USER EXPERIENCE, AND WE TALKED

A: I'LL TRY TO CHOOSE MY WORDS CAREFULLY.
SO WHEN I CREATED THIS SLIDE, I TALKED ABOUT THE, THE REMARKABLE SIMILARITY OF THE WAY THE ICONS ARE ARRANGED, DOWN TO THE ICONS, WE TALKED ABOUT THE KEYBOARD ARRANGEMENT --

THE COURT: WAIT. WHO IS HE TALKING TO? HE WAS NOT AT THE MEETING, SO WHY DOES HE KEEP SAYING "WE TALKED ABOUT"? WHO IS HE TALKING TO? I'VE ALREADY SAID HE CAN'T TESTIFY ABOUT THE MEETING THAT HE DIDN'T ATTEND.

MR. MUELLER: UNDERSTOOD.

THE COURT: THIS NEEDS TO BE CLEANED THIS
UP.

MR. MUELLER: ABSOLUTELY.

Q: MR. TEKSLER, LET'S BE VERY CLEAR. I'M JUST ASKING ABOUT WHAT DO WE SEE ON THIS PAGE OF THE DOCUMENT?

29

2017

A: YES.

Q: WHY DON'T YOU EXPLAIN WHAT WE SEE IN TERMS OF THE ACTUAL IMAGES ON PAGE 18 OF THIS AUGUST 4TH PRESENTATION?

A: YES, ABSOLUTELY. SO THE FOUR-BY-FOUR GRID, THE REMARKABLE SIMILARITY TO SAMSUNG'S PRODUCT; THE CALENDAR, REMARKABLE SIMILARITY; AS WELL AS THE FENCE AT THE BOTTOM; THE CLOCKS THAT ARE THERE; THE NOTES APPLICATION SECTION AND THE KEYBOARD ARRANGEMENT, ALL THOSE THINGS WERE WHAT I INTENDED TO COMMUNICATE BY CREATING THIS SLIDE.

Q: AND FINALLY, IF YOU COULD LOOK AT PAGE 19, THE VERY NEXT PAGE, WHAT DO WE SEE HERE? A SOWE--

MS. MAROULIS: OBJECTION. CALLS FOR OPINION TESTIMONY.

THE COURT: CALLS FOR WHAT? I'M SORRY?

MS. MAROULIS: OPINION.

MR. MUELLER: HERE AGAIN I'M JUST ASKING
ABOUT A PAGE IN THE DOCUMENT THAT HE AUTHORED.

THE COURT: ALL RIGHT. OVERRULED.

THE WITNESS: SO BACK TO APPLE'S USER EXPERIENCE HERE, PART OF THAT IS THE OUT OF BOX EXPERIENCE, AND THIS SLIDE WAS MEANT TO RELAY HOW THE OUT OF BOX EXPERIENCE WAS INCREDIBLY SIMILAR,

30

2018

YOU KNOW, FOR HOW THE PACKAGING WORKED ALL THE WAY DOWN TO HOW THE BOX -- YOU KNOW, THE APPEARANCE OF THE BOX, THE LACK OF MANUALS, THINGS OF THAT SORT.

BY MR. MUELLER:

Q: LAST QUESTION, MR. TEKSLER. WHAT ULTIMATELY HAPPENED WITH THESE COPYING ISSUES?

MS. MAROULIS: OBJECTION. CALLS FOR SPECULATION.

THE COURT: WHY DON'T YOU LAY A FOUNDATION THAT HE KNOWS?

MR. MUELLER: SURE.

Q: MR. TEKSLER, YOU WORKED ON THIS PRESENTATION
ON AUGUST

A: YES.

Q: WERE SAMSUNG?

A: YES, ON SEVERAL OCCASIONS.

Q: I'LL REPEAT MY QUESTION. WHAT ULTIMATELY HAPPENED WITH THE COPYING ISSUES IDENTIFIED IN THIS PRESENTATION?
4TH; CORRECT? YOU PARTY TO ADDITIONAL DISCUSSIONS WITH
A SO--

MS. MAROULIS: OBJECTION. BEYOND THE SCOPE OF CROSS.

MR. MUELLER: YOUR HONOR, THESE ISSUES WERE RAISED BY MS. MAROULIS, INCLUDING THE DESIGN

31

2019

COPYING ISSUES SPECIFICALLY ON FRIDAY.

THE COURT: I DON'T THINK SHE RAISED WHAT
HAPPENED BETWEEN THE PARTIES IN HER CROSS, SO IT'S SUSTAINED.

MR. MUELLER: NO FURTHER QUESTIONS. THANK YOU, SIR.

THE COURT: NOW, PX 51, I DON'T HAVE THAT
IN EITHER OF THE BINDERS.

MS. MAROULIS: YOUR HONOR, I THINK
MR. MUELLER WAS REFERRING TO WHAT'S BEEN ENTERED INTO EVIDENCE AS DX 568.

Q: MR. TEKSLER, MR. MUELLER SHOWED YOU SEVERAL SLIDES OF THE PRESENTATION YOU PREPARED; IS THAT CORRECT?

A: YES, THAT'S CORRECT.

Q: IN NONE OF THE SLIDES ARE THE WORDS "TRADE

32

2020

DRESS" OR "DESIGN PATENT" EVER MENTIONED; CORRECT?

A: BY -- BY THOSE WORDS?

Q: YES.

A: I AGREE.

Q: AND YOU WERE NOT AT THE MEETING TO DETERMINE WHETHER ANY WORDS LIKE THAT WERE USED WITH THE PAGES THAT MR. MUELLER SHOWED YOU; CORRECT?

A: I WAS NOT AT THE MEETING. I WAS AT THE SUBSEQUENT MEETING. I COULDN'T MAKE THE ORIGINAL ONE, BUT I WAS IN THE OCTOBER MEETING.

Q: ALL RIGHT. BUT YOU WERE NOT AT THE SEPTEMBER MEETING; RIGHT?

A: I BELIEVE IT WAS AUGUST 4TH.

Q: I'M SORRY, AUGUST.

A: YES, I WAS NOT AT THE AUGUST 4TH MEETING.

Q: OKAY. LET'S TURN TO DX 586 THAT YOU ALSO REVIEWED WITH COUNSEL, AND LET'S SHOW DX 586, PAGE 13, PLEASE.
DO YOU SEE THE THIRD, OR THE FOURTH OPTION ON THIS DOCUMENT IS "SOME SAMSUNG SMARTPHONE PRODUCTS MAY NOT ADOPT THE DISTINCTIVE INDUSTRIAL DESIGN."
IS THAT ONE OF THE OPTIONS DESCRIBED

A: YES, THAT'S CORRECT.
HERE?

33

2021

Q: IS IT ALSO CORRECT THAT THERE WAS AN OPTION THAT DID INCLUDE INDUSTRIAL DESIGN?

A: SO LET ME SPECIFY WHAT WE MEANT IN THIS, AND THIS WAS CLARIFIED IN OTHER PARTS OF THIS PRESENTATION AS WELL, WHICH IS WHAT WE WERE TALKING ABOUT WAS THE OVERALL FORM FACTOR OF THE PHONE, WHETHER IT WAS IN A COMPLETE TOUCHSCREEN PHONE OR WAS IT A SMARTPHONE THAT HAD, LIKE, FOR EXAMPLE, A FULL KEYBOARD, A PHYSICAL KEYBOARD ON IT, AND THAT'S WHAT WE WERE RELATING TO.
SO IF YOU LOOK AT THE EXAMPLES, I THINK IT CLARIFIES IT VERY NICELY THAT WHAT WE WERE REFERRING TO WAS AN OVERALL TOUCHSCREEN PHONE.

Q: ISN'T IT TRUE, SIR, THAT ONE OF THE OPTIONS, BASED ON THIS PRESENTATION, WAS ONE THAT INCLUDED INDUSTRIAL DESIGN?

A: NOT IN TERMS OF DESIGN PATENTS, NO. I DISAGREE WITH THAT.

Q: ALL RIGHT. PLEASE TURN TO PAGE 15 OF THE SAME DOCUMENT.
DO YOU SEE, SIR, THAT THE PRESENTATION OFFERED $30 PER UNIT FOR SMARTPHONE?

A: I DO.

Q: AND DO YOU SEE THAT THE PRESENTATION OFFERED 40 UNITS FOR A TABLET? CORRECT?

34

2022

A: $40 PER UNIT? Q YES.

A: YES, I AGREE.

Q: AND THIS WAS FOR THE ENTIRE PORTFOLIO, NOT JUST ONE PATENT; RIGHT?

A: IT WAS NOT THE ENTIRE PORTFOLIO. IT WAS WHAT I'VE TERMED IN THIS AS THE CORE COMPUTING PATENTS. IT NEVER INCLUDED APPLE'S UNIQUE USER EXPERIENCE AND WE MADE THAT CLEAR.

Q: THIS WAS FOR MORE THAN JUST ONE PATENT. THERE'S SEVEN PATENTS; CORRECT, SIR?

A: YES, THAT'S CORRECT.
QUESTIONS.

MS. MAROULIS: OKAY. I HAVE NO FURTHER

THE COURT: ALL RIGHT. THE TIME IS 9:20. GO AHEAD, PLEASE.

MR. MUELLER: ONE QUESTION, YOUR HONOR.

FURTHER REDIRECT EXAMINATION

BY MR. MUELLER:

Q: IF WE CAN GO BACK TO THAT SAME PAGE, PLEASE, PAGE 15 OF THE OCTOBER PRESENTATION.
MR. TEKSLER, DID THIS OFFER INCLUDE ANY OF THE PATENTS ASSERTED IN THIS CASE?

A: NO, IT DID NOT.

MR. MUELLER: NOTHING FURTHER. THANK

35

2023

YOU.

THE COURT: OKAY. THE TIME IS NOW 9:20. IS THIS WITNESS EXCUSED?
TO RECALL.

MR. MCELHINNY: YOUR HONOR, AS OUR NEXT WITNESS, WE'RE GOING TO CALL BY DEPOSITION JUN WON LEE, WHO'S THE DIRECTOR OF LICENSING FOR SAMSUNG ELECTRONICS COMPANY.

THE COURT: OKAY. GO AHEAD. IT'S NOW 9:21.

MR. MCELHINNY: CAN WE DIM THE LIGHTS?

THE COURT: YES.

(WHEREUPON, THE VIDEOTAPED DEPOSITION OF
JUN WON LEE WAS PLAYED IN OPEN COURT OFF THE RECORD.)

MS. MAROULIS: YOUR HONOR, DO YOU WANT US TO PRESENT OUR COUNTER --

THE COURT: ALL RIGHT. THE TIME IS 9:28.

MR. MCELHINNY: YOUR HONOR, I'LL NOTE FOR

36

2024

THE RECORD THAT WHAT WAS REFERRED TO IN THE DEPOSITION CLIP AS EXHIBIT 1 IS PLAINTIFF'S EXHIBIT 52 IN EVIDENCE IN THIS CASE.

THE COURT: OKAY.

MR. MCELHINNY: AND, TWO, I WOULD LIKE TO OFFER FOR THE RECORD PLAINTIFF'S EXHIBIT 201, THAT'S THE TRANSCRIPT OF THE DEPOSITION CLIP THAT WAS JUST PLAYED SINCE THE REPORTER DOESN'T REPORT IT.

MS. MAROULIS: YOUR HONOR, WE WEREN'T NOTIFIED THAT APPLE WAS SEEKING TO INTRODUCE IT AS AN EXHIBIT. THE DEPOSITION WAS PLAYED.

MR. MCELHINNY: THE COURT HAS THE -- THE RECORD HAS TO HAVE A TRANSCRIPT OF WHAT WAS PLAYED. OTHERWISE THERE'S NO RECORD OF IT.

MR. VERHOEVEN: YOUR HONOR, THIS IS MR. VERHOEVEN.
IN MY EXPERIENCE, YOUR HONOR, TRANSCRIPTS -- THE TRIAL TRANSCRIPT, DEPOSITION TRANSCRIPTS, DON'T GO TO THE JURY, AND SO WE WOULD OBJECT TO MOVING IT INTO EVIDENCE.

THE COURT: IT'S NOT GOING TO BE
ADMITTED. REQUEST PERMISSION TO LODGE IT SO THAT IT IS

MS. MAROULIS: YOUR HONOR, MAY WE PROCEED
WITH THE COUNTER-DESIGNATIONS?

THE COURT: THAT'S FINE. THE TIME IS NOW
9:29. GO AHEAD, PLEASE.

(WHEREUPON, THE VIDEOTAPED DEPOSITION OF JUN WON LEE WAS PLAYED IN OPEN COURT OFF THE RECORD.)

THE COURT: OKAY. THE DO YOU HAVE A PHOTO TO
JURORS?
TIME IS 9:31. HAND OUT FOR THE

MR. MCELHINNY: WE DO,

THE CLERK: I HAVE ONE

THE COURT: WE CAN DO THAT DURING THE
YOUR HONOR. RIGHT HERE.
BREAK. THAT'S FINE. THANK YOU. WHO IS YOUR NEXT WITNESS?

MR. MCELHINNY: OUR NEXT WITNESS IS MR. DONG HOON CHANG, WHO IS THE HEAD OF SAMSUNG'S MOBILE DESIGN GROUP. WE'RE CALLING HIM BY DEPOSITION, YOUR HONOR.

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2026

THE COURT: THAT'S FINE. 9:32. GO
AHEAD.

(WHEREUPON, THE VIDEOTAPED DEPOSITION OF DONG HOON CHANGE WAS PLAYED IN OPEN COURT OFF THE RECORD.)

THE COURT: IT'S 9:35.

MR. MCELHINNY: YOUR HONOR, AT THIS POINT I WOULD ASK TO LODGE PLAINTIFF'S EXHIBIT 202, WHICH IS A TRANSCRIPT OF MR. CHANG'S DEPOSITION.

THE COURT: THAT'S FINE.

MS. MAROULIS: SHORT COUNTER-DESIGNATIONS, YOUR HONOR. MAY WE PROCEED?

THE COURT: YES, PLEASE. IT'S 9:35. GO AHEAD, PLEASE.

(WHEREUPON, THE VIDEOTAPED DEPOSITION
DONG HOON CHANGE OF WAS PLAYED IN OPEN COURT OFF THE RECORD.)

THE COURT: IS THAT IT? OKAY. IT'S 9:36.
GO AHEAD WITH YOUR NEXT WITNESS, PLEASE.

MR. MCELHINNY: YOUR HONOR, AT THIS POINT WE WOULD CALL TIMOTHY BENNER BY DEPOSITION.

MR. BENNER IS THE SENIOR MANAGER IN CONSUMER INSIGHTS AND ANALYTICS FOR SAMSUNG TELECOMMUNICATIONS AMERICA.

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2027

IN ADVANCE OF THE DEPOSITION, BASED ON YOUR HONOR'S RULINGS, WE WOULD OFFER INTO EVIDENCE PLAINTIFF'S EXHIBIT 69, WHICH IS THE J.D. POWER 2011 WIRELESS SMARTPHONE SATISFACTION STUDY; AND PLAINTIFF'S EXHIBIT 89, WHICH IS A SAMSUNG Q1 '11 DEEP DIVE DOCUMENT, BOTH OF WHICH WILL BE REFERRED TO IN THE TRANSCRIPT.

THE COURT: ALL RIGHT. ANY OBJECTION?

MS. MAROULIS: YOUR HONOR, NO FURTHER
OBJECTION.
WE REQUEST A LIMITING INSTRUCTION AS TO THE DEEP DIVE DOCUMENT.

THE COURT: GIVE ME ONE SECOND, PLEASE.

(PAUSE IN PROCEEDINGS.)

THE COURT: I DON'T SEE IN MY RULINGS ON
MR. BENNER'S EXHIBIT 69, 89 THE SPECIFIC -- WAIT ONE SECOND.
OH, I SEE. SO EXHIBIT 89, WHICH IS THE DEEP DIVE DOCUMENT, MAY ONLY BE CONSIDERED FOR PURPOSES OF SHOWING INTENT, WILLFULNESS, AND KNOWLEDGE AND NOT FOR ANY OTHER PURPOSE.

MR. MCELHINNY: ON THE PART OF SAMSUNG.

THE COURT: ON THE PART OF SAMSUNG, THAT'S CORRECT.
THE TIME IS 9:38. GO AHEAD, PLEASE.

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2028

RULING ON

MR. MCELHINNY: I'M SORRY. CAN WE GET A THOSE TWO DOCUMENTS?

THE COURT: YES, THEY'RE ADMITTED.

MR. MCELHINNY: THANK YOU.

(WHEREUPON, PLAINTIFF'S EXHIBIT NUMBERS 69 AND 89, HAVING BEEN PREVIOUSLY MARKED FOR IDENTIFICATION, WERE ADMITTED INTO EVIDENCE.)

(WHEREUPON, THE VIDEOTAPED DEPOSITION OF TIMOTHY BENNER WAS PLAYED IN OPEN COURT OFF THE RECORD.)

THE COURT: IS THAT IT FOR THE DEPO DESIGNATIONS?

MR. MCELHINNY: IT IS, YOUR HONOR. I WOULD NOTE FOR THE RECORD THAT THE EXHIBIT REFERRED TO IN THE DEPOSITION AS EXHIBIT 1594 HAS BEEN ADMITTED AS PLAINTIFF'S EXHIBIT 69; AND THE EXHIBIT ADMITTED AS 1603 HAS BEEN ADMITTED AS PLAINTIFF'S EXHIBIT 89.

THE COURT: ALL RIGHT. IT'S 9:43.

MR. MCELHINNY: I'M SORRY, YOUR HONOR. I ALSO WANT TO LODGE FOR THE RECORD, PLEASE, PLAINTIFF'S EXHIBIT 203, WHICH IS THE TRANSCRIPT OF THE DEPOSITION WE JUST PLAYED.

THE COURT: OKAY. THAT CAN BE LODGED FOR

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2029

THE RECORD. ALL RIGHT.

MS. MAROULIS: YOUR HONOR, MAY WE PROCEED WITH THE COUNTER-DESIGNATIONS?

THE COURT: YES, PLEASE. IT'S 9:43. GO AHEAD, PLEASE.

(WHEREUPON, THE VIDEOTAPED DEPOSITION OF TIMOTHY BENNER WAS PLAYED IN OPEN COURT OFF THE RECORD.)

THE COURT: IS THAT THE END? IT'S 9:47.

MR. MCELHINNY: IT IS, YOUR HONOR. AT THIS POINT, I WOULD LIKE TO LODGE PLAINTIFF'S EXHIBIT 204, THE TRANSCRIPT.

MR. MCELHINNY: WE WILL CALL AS OUR NEXT
WITNESS TIMOTHY SHEPPARD, WHO IS THE LEAD FOR SAMSUNG TECHNOLOGY AMERICA LOGISTICS TEAM.

THE COURT: OKAY. IT'S 9:48. GO AHEAD.

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2030

(WHEREUPON, THE VIDEOTAPED DEPOSITION OF TIMOTHY SHEPPARD WAS PLAYED IN OPEN COURT OFF THE RECORD.)

THE COURT: ALL RIGHT. IT'S 9:50.

MR. MCELHINNY: THANK YOU, YOUR HONOR. AT THIS POINT I WOULD LIKE TO LODGE PLAINTIFF'S EXHIBIT 204, WHICH IS A TRANSCRIPT OF THE SHEPPARD DEPOSITION.
ADMITTED.

THE COURT: OKAY. THAT'S LODGED, BUT NOT
DO YOU HAVE A COUNTER-DESIGNATION?

MS. MAROULIS: NO, YOUR HONOR, THERE'S NO ADDITIONAL TESTIMONY.

THE COURT: OKAY.

MR. MCELHINNY: AT THIS POINT I'D LIKE TO
TURN THE FLOOR BACK TO MY PARTNER, RACHEL KREVANS, YOUR HONOR.

THE COURT: OKAY. IT'S 9:50. CALL YOUR NEXT WITNESS, PLEASE.

MS. KREVANS: YOUR HONOR, APPLE CALLS
TERRY MUSIKA.

(PAUSE IN PROCEEDINGS.)

THE CLERK: PLEASE RAISE YOUR RIGHT HAND.

TERRY MUSIKA,

BEING CALLED AS A WITNESS ON BEHALF OF THE

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2031

PLAINTIFF, HAVING BEEN FIRST DULY SWORN, WAS EXAMINED AND TESTIFIED AS FOLLOWS:

THE WITNESS: YES, I DO.

THE CLERK: THANK YOU. PLEASE BE SEATED.

THE COURT: OKAY. IT'S 9:52. GO AHEAD, PLEASE.

THE CLERK: PLEASE STATE YOUR NAME AND
SPELL IT FOR THE RECORD.

THE WITNESS: YES, MY NAME IS TERRY
MUSIKA, T-E-R-R-Y, M-U-S-I-K-A.

DIRECT EXAMINATION

BY MS. KREVANS:

Q: GOOD MORNING, MR. MUSIKA.

A: GOOD MORNING.

Q: COULD YOU START BY TELLING THE JURY WHAT KIND OF WORK DO YOU DO?

A: I'M A CERTIFIED PUBLIC ACCOUNTANT AND HAVE BEEN FOR APPROXIMATELY JUST SHY OF 40 YEARS.

AND IN THAT CAPACITY, I HAVE, THROUGH THAT 40 YEARS, I HAVE DONE AUDITING AND I'VE DONE TESTIMONY SUCH AS THIS. AND I'VE ALSO OWNED AND OPERATED COMPANIES THAT I'VE HAD A SPECIFIC INTEREST IN MYSELF, AS WELL AS DONE SOME WORK, AS I THINK WE'LL TALK ABOUT, FOR THE COURTS.

Q: AND WHAT HAVE YOU BEEN ASKED TO DO, GENERALLY,

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2032

IN CONNECTION WITH THIS CASE?

A: MY ROLE AS THE FINANCIAL EXPERT WITNESS IS TO MAKE AN ASSUMPTION THAT THE JURY, THE COURT, HAS DECIDED THAT THE PATENTS OF APPLE'S ARE VALID AND THE TRADE DRESS IS VALID AND THAT SAMSUNG HAS INFRINGED.
THAT'S NOT PART OF MY OPINION. THAT'S JUST AN ASSUMPTION THAT I HAVE TO MAKE TO THEN MAKE A DECISION, OR A CALCULATION AS TO THE AMOUNT OF DAMAGES THAT SAMSUNG SHOULD PAY TO APPLE, ASSUMING THEY ACTUALLY DID INFRINGE AND ASSUMING THAT APPLE'S PATENTS ARE VALID.

Q: OKAY. COULD WE SEE PDX 34B.1, PLEASE.
MR. MUSIKA, COULD YOU PLEASE WALK US GENERALLY THROUGH THE COURSE OF YOUR VERY LENGTHY CAREER?

A: YES, I'LL BE BRIEF. INVOTEX IS THE MOST RECENT EMPLOYER, AND I FOUNDED INVOTEX PROBABLY SIX OR SEVEN YEARS AGO. TODAY I'M A MANAGING DIRECTOR THERE.

PRIOR TO THAT, RIGHT OUT OF GRADUATE SCHOOL, I WENT TO WORK FOR ONE OF THE LARGE INTERNATIONAL ACCOUNTING FIRMS, KPMG, IN LOS ANGELES.
AFTER THAT I WAS RECRUITED TO GO TO WORK

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2033

FOR ANOTHER ONE OF THE OTHER LARGE INTERNATIONAL ACCOUNTING FIRMS, WHICH IS TODAY PRICEWATERHOUSECOOPERS, AND I WORKED IN THERE AS BOTH AN AUDITOR AND A CONSULTANT IN THEIR NATIONAL OFFICE DESIGNING AUDIT TESTS FOR THEM THAT THEY USE NATIONWIDE, AND I WAS EVENTUALLY MADE INTO AUDIT PARTNER.

Q: LET ME STOP YOU RIGHT THERE. YOU SAID AFTER GRADUATE SCHOOL. TELL US ABOUT YOUR EDUCATION.

A: UNDERGRADUATE DEGREE IN HISTORY FROM INDIANA UNIVERSITY. I WAS A HISTORY TEACHER IN L.A. FOR A FEW YEARS PRIOR TO GOING BACK TO GRADUATE SCHOOL. THEN I GOT A MASTER'S IN PUBLIC FINANCE, SAME, INDIANA UNIVERSITY IN BLOOMINGTON, INDIANA.

Q: OKAY. YOU SAID YOU DID BOTH AUDITING AND CONSULTING WORK AT KPMG AND PWC. IS PWC PRICEWATERHOUSECOOPERS?

A: YES, IT IS.

Q: OKAY. COULD YOU EXPLAIN THE KINDS OF THINGS YOU DID IN CONNECTION WITH THE AUDITING WORK THAT YOU DID AT THESE TWO ACCOUNTING FIRMS?

A: OVER THE APPROXIMATELY TEN YEARS THAT I WAS WITH BOTH AUDITING FIRMS, I DID A RANGE OF AUDITS. I DID SMALL LOCAL GOVERNMENTS; I DID DESIGN WORK, I ACTUALLY DESIGNED AN ACCOUNTING SYSTEM FOR THE CITY

46

2034

AND COUNTY OF SAN FRANCISCO; I'VE DONE AUDITS OF LARGE INTERNATIONAL COMPANIES; NONPROFITS.
SORT OF THE RANGE OF SMALL TO LARGE PUBLIC AND PRIVATE COMPANIES.

Q: AND WHAT KIND OF CONSULTING WORK DID YOU DO?

A: MOST OF MY CONSULTING WORK WAS DESIGN WORK, DESIGNING ACCOUNTING SYSTEMS AND IMPLEMENTING ACCOUNTING SYSTEMS FOR STATE AND LOCAL GOVERNMENTS, AS WELL AS PRIVATE ENTERPRISES.

Q: DID YOU, IN THE COURSE OF YOUR AUDITING CONSULTING WORK, DO ANY WORK FOR COMPANIES WHERE THE STRUCTURE OF THE COMPANY WAS A PARENT WHICH WAS IN A COUNTRY OUTSIDE THE UNITED STATES WITH SUBSIDIARIES IN THE UNITED STATES?

A: YES, BOTH WAYS. I'VE DONE AUDITS OF COMPANIES WHICH WERE DOMICILED IN THE UNITED STATES AND HAD SUBSIDIARIES OR OPERATIONS AROUND THE WORLD; AND I'VE DONE AUDITS OF COMPANIES WHICH WERE BASED IN THE U.K. OR SOMEWHERE ELSE AROUND THE WORLD AND HAD OPERATIONS IN THE U.S., MUCH LIKE APPLE AND SAMSUNG.

Q: OKAY. NOW, I'M GOING TO --

MR. PRICE: IF I MIGHT MAKE A COMMENT? THE REALTIME IS WORK NOT WORKING, JUST TO LET THE COURT KNOW.

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2035

THE COURT: MINE IS NOT AS WELL.

(PAUSE IN PROCEEDINGS.)

THE COURT: LET'S TRY TO FIX IT AT THE
BREAK AT 10:30. IS THAT ALL RIGHT?

MR. PRICE: FOR AN EXPERT, IT'S NICE TO
SEE IT.

THE COURT: THAT'S FINE. LET'S TAKE A BREAK. IT'S 9:56. WHY DON'T WE GO AHEAD AND MAYBE JUST TAKE A FIVE MINUTE BREAK NOW AND IF ANYONE NEEDS TO USE THE REST ROOM OR ANYTHING.
AGAIN, PLEASE KEEP AN OPEN MIND. DON'T DISCUSS THE CASE WITH ANYONE, AND PLEASE DON'T READ ABOUT THE CASE.

(WHEREUPON, A RECESS WAS TAKEN.)

(WHEREUPON, THE FOLLOWING PROCEEDINGS WERE HELD IN THE PRESENCE OF THE JURY:)

THE COURT: OKAY. WELCOME BACK. SORRY FOR YOUR TECHNICAL DIFFICULTIES HERE.
IF EVERYONE WOULD PLEASE TAKE A SEAT.
ALL RIGHT. THE TIME IS NOW 10:07. THAT'S GOING TO BE OUR BREAK FOR THE MORNING IF YOU DON'T MIND.
GO AHEAD, PLEASE.

BY MS. KREVANS:

Q: MR. MUSIKA, COULD YOU TELL US ABOUT THE COURT

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2036

APPOINTED TRUSTEE EXPERIENCE YOU HAD.

A: YES. FOR ABOUT THE LAST 20 YEARS, I HAVE BEEN CALLED UPON BY VARIOUS COURTS, PRIMARILY THE BANKRUPTCY, UNITED STATES BANKRUPTCY COURTS, TO SERVE THE COURTS AS A COURT APPOINTED TRUSTEE.

SOMETIMES I'VE SERVED AS AN OPERATING TRUSTEE WHERE THE COMPANY IS HAVING FINANCIAL DIFFICULTY AND MANAGEMENT'S IN QUESTION, SO I'VE BEEN CALLED IN TO RUN THE COMPANY FOR THE BENEFIT OF THE CREDITORS.

AT TIMES I'VE BEEN CALLED IN AS A SPECIAL EXAMINER BECAUSE THERE'S SOMETHING IN THE COMPANY THAT'S, THAT'S -- THAT THE COURT IS HAVING DIFFICULTY WITH AND THEY WANT AN INDEPENDENT EXAMINER TO COME IN AND GIVE THE COURT AN OPINION.

I'VE ALSO SERVED AS A RECEIVER IN STATE COURT. IT'S VERY MUCH LIKE AN OPERATING TRUSTEE.

I'VE SERVED AS A LIQUIDATING TRUSTEE WHERE I'VE TAKEN THE ASSETS AND LIQUIDATED THE ASSETS, AGAIN, FOR THE BENEFIT OF THE CREDITORS.

AND I'VE ALSO SERVED AS A SPECIAL MASTER IN COURT, IN SHAREHOLDER DISPUTES WHERE THE COURT WANTS ITS OWN EXPERT, IN ESSENCE, TO ASSIST IN THE EVALUATION.

Q: BRIEFLY, CAN YOU DESCRIBE WHAT YOU MEAN BY

49

2037

INVESTIGATIONS ON THE FOURTH PORTION OF YOUR SLIDE?

A: YES. OVER THE 40 YEARS I'VE WORKED NUMEROUS
TIMES FOR THE FEDERAL GOVERNMENT, VARIOUS OF THE FEDERAL GOVERNMENT; I INVESTIGATED THE FBI; I ANALYZED AND WORK WITH THE IRS INVESTIGATIONS; I'VE WORKED FOR THE STATE DEPARTMENT IN MULTI-INTERNATIONAL FRAUD CLAIMS INVOLVING CONSTRUCTION CLAIMS IN EGYPT; I'VE WORKED NUMEROUS TIMES WITHIN THE JUSTICE DEPARTMENT FOR THE VARIOUS UNFORTUNATE SAVINGS AND LOAN CRISES THAT THIS COUNTRY HAS HAD IN THE LAST 30 YEARS.

Q: DO YOU HAVE PRIOR EXPERIENCE DOING DAMAGE ANALYSIS FOR INTELLECTUAL PROPERTY CASES LIKE THIS ONE?

A: YES.

Q: HOW OFTEN HAVE YOU DONE THIS TYPE OF ANALYSIS?

A: I'VE BEEN INVOLVED IN MORE THAN 200 INTELLECTUAL PROPERTY CASES OVER THE LAST 25 YEARS.

Q: HAVE YOU BEEN INVOLVED BEFORE IN ANY CASES IN WHICH SAMSUNG WAS A PARTY?

A: YES.

Q: ON WHICH SIDE? SAMSUNG'S OR THE OTHER SIDE?

A: BOTH SIDE. I'VE WORKED FOR AND AGAINST SAMSUNG.

MS. KREVANS: YOUR HONOR, WE WOULD TENDER
AGENCIES FRAUD FOR IN

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2038

MR. MUSIKA AS AN ECONOMIC AND ACCOUNTING EXPERT IN THE CALCULATION OF INTELLECTUAL PROPERTY DAMAGES.

THE COURT: ANY OBJECTION?

MR. PRICE: NO OBJECTION.

THE COURT: ALL RIGHT. SO GO AHEAD, PLEASE.
CERTIFIED.

BY MS. KREVANS:

Q: MR. MUSIKA, HAVE YOU FORMED ANY REGARDING WHAT DAMAGES APPLE SHOULD RECEIVE IF THE JURY FINDS THAT SAMSUNG VIOLATED APPLE'S INTELLECTUAL PROPERTY RIGHTS?

A: YES.

Q: WHAT IS YOUR OVERALL OPINION?

A: MY OVERALL OPINION IS THAT THE DAMAGES THAT APPLE SHOULD RECEIVE AS COMPENSATION FOR THE ASSUMED INFRINGEMENT IS A RANGE OF DAMAGES BETWEEN $2.5 BILLION, THAT'S $2,500,000,000, AND $2,750,000,000.
OPINIONS
SO SOMEWHERE IN THAT RANGE.

Q: OKAY. LET'S START, TO HELP US UNDERSTAND YOUR OPINION, WITH THE ECONOMIC BACKGROUND.
COULD YOU EXPLAIN HOW IT IS THAT A COMPANY LIKE APPLE MIGHT BE INJURED WHEN A COMPETITOR USES ITS INTELLECTUAL PROPERTY?

A: YES. I HAVE A SERIES OF SLIDES THAT WILL HELP

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2039

ILLUSTRATE THIS.

Q: OKAY. AND FOR THE RECORD, WE'RE LOOKING AT PDX 34B.2.
WHAT HAVE YOU DEPICTED HERE, MR. MUSIKA?

A: THIS SLIDE, THE OVERALL SLIDE IS THE MARKETPLACE. SO IT'S -- IT'S -- IT SHOWS TWO ARCH COMPETITORS, ON THE LEFT-HAND SIDE APPLE AND ON THE RIGHT-HAND SIDE SAMSUNG, AND THEY BOTH COMPETE IN THE MARKETPLACE FOR THE CUSTOMERS THAT ARE IN THE MIDDLE.
AND OBVIOUSLY THEY'RE BOTH PROFIT SEEKING ORGANIZATIONS AND THEY WOULD LIKE TO MAKE THE SALE AND GAIN THE ECONOMIC BENEFIT, WHICH IS THE MONEY IN BETWEEN.

Q: OKAY. COULD WE SEE SLIDE 34B.3?

A: WELL, AS YOU SEE, AS THE -- I'M SORRY.

Q: LET'S GO TO B.4.

A: WELL, WHAT YOU SEE IS THAT, IS APPLE SEEKS TO COMPETE WITH THE INTELLECTUAL PROPERTY, AND SAMSUNG IS ASSUMED, AGAIN, TO USE THAT INTELLECTUAL PROPERTY AND MAKES THE SALE AND SO THAT ECONOMIC BENEFIT HAS SLID ACROSS TO SAMSUNG.
WHAT MY JOB, AS I INDICATED EARLIER, IS TO DETERMINE HOW MUCH OF THAT GAIN THAT SAMSUNG HAS MADE BY USING, ASSUMED USE OF THE INTELLECTUAL

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2040

PROPERTY, SHOULD GO BACK TO APPLE, AND THAT'S WHY THAT MONEY SLIDES BACK ACROSS.

Q: OKAY. FOR PURPOSES OF FORMING YOUR OPINIONS IN THIS CASE, HAVE YOU DONE ANYTHING TO EVALUATE SAMSUNG'S ACCUSED SMARTPHONE SALES AND SAMSUNG'S ACCUSED TABLET SALES?

A: I HAVE.

Q: OKAY. CAN WE SEE SLIDE 34B.6.
WHAT WAS YOUR OVERALL CONCLUSION ABOUT THE VOLUME OF SAMSUNG'S ACCUSED SMARTPHONE AND TABLET SALES AND THE REVENUES ASSOCIATED WITH THAT?

A: WELL, THE DAMAGE NUMBERS I'VE JUST GIVEN YOU ARE VERY LARGE, AND THEY'RE VERY LARGE BECAUSE WE'RE DEALING WITH A VERY LARGE QUANTITY OF SALES.
WHAT'S DEPICTED HERE IS THAT THE COMBINATION OF SMARTPHONES AND TABLETS, OVER THE TWO YEARS THAT'S AT ISSUE IN THIS CASE, SAMSUNG HAS SOLD 22.7 MILLION INDIVIDUAL SMARTPHONES AND/OR TABLETS.
THE AMOUNT THAT'S ASSOCIATED WITH THOSE SALES IS $8,160,000,000. THAT'S SAMSUNG'S NUMBER. THAT'S JUST -- THAT'S THAT MONEY THAT SLID ACROSS. IT WAS EQUAL TO $8,160,000,000.

Q: WHERE DID YOU GET THE INFORMATION THAT YOU USED TO DERIVE THE 22 MILLION INFRINGING SALES AND

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2041

THE $8 BILLION OF REVENUE?

A: THAT'S AN IMPORTANT POINT. THESE AREN'T MY NUMBERS. THESE ARE SAMSUNG'S NUMBERS. THIS IS ACTUALLY TAKEN DIRECTLY FROM SAMSUNG'S RECORDS.

Q: OKAY. COULD WE LOOK AT JOINT EXHIBIT 1500, PLEASE. JUST LOOK AT THAT IN YOUR BINDER FOR A MOMENT, MR. MUSIKA.
DO YOU HAVE -- IT SHOULD BE RIGHT AT THE
FRONT.

A: I'VE GOT IT.

Q: OKAY. WHAT IS JOINT EXHIBIT 1500?

A: JOINT EXHIBIT 1500 IS AN EXHIBIT THAT HAS BEEN JOINTLY SUBMITTED BY BOTH APPLE AND SAMSUNG AND AGREED TO BY BOTH PARTIES, AND IT LISTS THOSE TOTAL 8 BILLION OF SALES --

Q: LET ME STOP YOU FOR A MOMENT BEFORE YOU TELL US THE NUMBERS.
YOUR HONOR, WE WOULD MOVE THE ADMISSION OF JOINT EXHIBIT 1500.

THE COURT: ANY OBJECTION?

MR. PRICE: NO OBJECTION.

THE COURT: OKAY. IT'S ADMITTED.

(WHEREUPON, JOINT EXHIBIT NUMBER 1500, HAVING BEEN PREVIOUSLY MARKED FOR IDENTIFICATION, WAS ADMITTED INTO

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2042

EVIDENCE.)

MS. KREVANS: COULD WE SHOW THE JURY,
MR. LEE, JOINT EXHIBIT 1500.

Q: CAN YOU -- IN EXHIBIT 1500, CAN YOU SHOW US WHERE YOU GOT THE 22 MILLION PHONE AND TABLET SALES AND THE 8 BILLION REVENUE NUMBERS.

A: RIGHT. I'D LIKE TO APOLOGIZE, FIRST, FOR THE SMALL NUMBERS; AND SECONDLY, I'M GOING TO BE ABBREVIATING A LOT OF NUMBERS FROM TIME TO TIME, SO THAT COULD GET A LITTLE CONFUSING. I WANT TO MAKE SURE THAT I TRY TO POINT OUT WHEN I'M SAYING 2.4 BILLION OR MILLION SO I DON'T CONFUSE THE COURT.
SO YOUR PENDING QUESTION, IF WE WOULD GO DOWN TO THE -- IN MOST SCHEDULES, IT ADDS ACROSS.
THESE ARE COLUMN ON
CALENDAR QUARTERS, AND THEN THAT FINAL THE RIGHT TOTALS DOWN. SO THIS IS THE PORTION OF THE SALES THAT THE SMARTPHONES, AND IF WE GO TO THE
RELATE TO BOTTOM THERE, SO THIS IS -- THIS IS A TRUNCATED -- OR IT'S A NUMBER THAT'S CUT OFF, SO THAT 21 IS 21,251,000 SMARTPHONE UNITS, AND THE NUMBER BELOW IT WITH THE DOLLAR SIGN IS 7,516,000,000.
AND TO GET BACK TO OUR 22 MILLION AND OUR $8 BILLION NUMBER, WE HAVE TO ADD PAGE 2, WHICH IS THE TABLETS.

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2043

WE GO TO THE SAME SPOT, AND THERE'S THE 1,438 TABLETS, WE ADD THAT TO THE SMARTPHONE TO GET TO THE $22 MILLION -- OR 22 MILLION UNITS, AND THERE'S 644,000, WHICH WE ADD THAT BACK TO THE SMARTPHONES, WE GET TO THE $8.1 BILLION.

Q: NOW, MR. MUSIKA, YOU SAID 644,000, THAT NUMBER THERE IS -- BECAUSE IT'S MISSING ZEROS, IT'S ACTUALLY WHAT?

A: MILLIONS. SORRY. I DID IT MYSELF. I APOLOGIZE.

Q: ALL RIGHT. DOES THIS REPRESENT SALES JUST IN THE UNITED STATES?

A: SALES OF TABLETS AND SMARTPHONES ONLY IN THE UNITED STATES BY THE DEFENDANT SAMSUNG.

Q: OKAY. HAVE YOU LOOKED AT INFORMATION ABOUT HOW SAMSUNG'S SALES OF THE ACCUSED PRODUCTS IN THIS CASE -- LET ME START OVER.
HAVE YOU LOOKED AT INFORMATION ABOUT HOW SAMSUNG SALES OF SMARTPHONES AND TABLETS BEFORE THE INTRODUCTION OF THE ACCUSED PRODUCTS IN THIS CASE COMPARED TO SAMSUNG SALES OF SMARTPHONES AND TABLETS AFTER THE INTRODUCTION OF THE ACCUSED PRODUCTS?

A: YES.

Q: OKAY. COULD WE SEE SLIDE 34B.9. WHAT

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2044

INFORMATION IS SHOWN ON 34B.9, MR. MUSIKA?

A: THIS IS A GRAPH, AND ON THE VERTICAL AXIS, IT'S THE MARKET SHARE PERCENT. SO IT'S HOW MUCH OF THE OVERALL SMARTPHONE MARKET DID SAMSUNG HAVE OVER TIME, WHICH IS OUR HORIZONTAL X AXIS THERE.
AND THE SLIDE IS DIVIDED UP, AS YOU JUST INDICATED, INTO TWO SEGMENTS. ON THE LEFT-HAND SIDE WITH THE BLUE IS THE TIME PERIOD FOR SAMSUNG PRIOR TO THE INTRODUCTION OF THEIR FIRST ACCUSED PHONE, AND WHAT WE CAN SEE THEN WITH THE INTRODUCTION OF THE FIRST ACCUSED PHONE, THE RED LINE, ON THE RIGHT-HAND SIDE IS THE PERIOD OF TIME AFTERWARDS.

Q: AND HOW DO THE TWO PERIODS, THAT IS, BEFORE AND AFTER, COMPARE TO ONE ANOTHER?

A: YES. IT'S A RATHER DRAMATIC DEMONSTRATION OF SAMSUNG WAS LOSING MARKET SHARE DURING THE PERIOD PRIOR TO 2010, APPROXIMATELY JUNE OF 2010 WHEN THEY INTRODUCED THE FIRST ACCUSED PHONE.
AFTER THEY INTRODUCED THE FIRST ACCUSED PHONE, SAMSUNG'S MARKET SHARE TOOK AN ABRUPT UPWARD SWING AND HAS CONTINUED TODAY TO ADVANCE DRAMATICALLY IN INCREASES IN MARKET SHARE.

Q: WHERE DID THE INFORMATION THAT FORMS THIS CHART COME FROM?

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2045

A: ONCE AGAIN, THIS ISN'T MY INFORMATION. THIS IS TAKEN NOT FROM APPLE OR FROM SAMSUNG IN THIS CASE. THIS IS TAKEN -- YOU CAN SEE PERHAPS RIGHT DOWN THERE ON THE BOTTOM, SOURCE IDC WORLDWIDE QUARTERLY.
IDC IS AN INDEPENDENT MARKETING ORGANIZATION THAT BOTH APPLE AND SAMSUNG USE TO HELP THEM IN DOING THEIR OWN MARKET RESEARCH. SO THIS IS AN INDEPENDENT STUDY AND ANALYSIS THAT WAS DONE BY IDC.

Q: OKAY. LET'S TURN TO THE SPECIFIC DAMAGES REMEDIES THAT YOU EVALUATED IN THIS CASE.
WHAT KINDS OF REMEDIES DID YOU APPLY WITH RESPECT TO THE VARIOUS INTELLECTUAL PROPERTY RIGHTS THAT APPLE HAS ASSERTED IN THE CASE?

A: I CONSIDERED THREE DIFFERENT FORMS OF REMEDY IN TOTAL AS IT RELATES TO THE DESIGN, AND THAT WOULD BE THE DESIGN PATENT AND THE TRADE DRESS. I CONSIDERED TWO FORMS OF DAMAGE.

Q: WHAT WERE THOSE TWO FORMS?

A: ONE, ONE IS CALLED SAMSUNG'S PROFITS, AND THE OTHER IS CALLED APPLE'S LOST PROFITS.
TO PUT IT IN REAL STRAIGHT TERMS, IT'S EITHER WHAT SAMSUNG HAS GAINED OR IT'S WHAT APPLE HAS LOST.

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2046

IN THE CASE OF SAMSUNG'S GAIN, THAT'S SOMETIMES REFERRED TO AS AN UNJUST ENRICHMENT BECAUSE THE PRESUMPTION IS THEY'VE MADE THAT GAIN, THAT MONEY HAS SLID ACROSS THE SLIDE BECAUSE THEY VIOLATED APPLE'S INTELLECTUAL PROPERTY.

Q: OKAY. AND REMIND US AGAIN, WHICH TYPES OF INTELLECTUAL PROPERTY RIGHTS DID YOU USE THIS KIND OF ANALYSIS, THE SAMSUNG PROFIT OR APPLE'S LOST PROFITS FOR?

A: I USED THEM BOTH, AND WE'RE GOING TO SEE THE SITUATION -- THIS ISN'T DOUBLE COUNTING. I USED THEM BOTH FOR THE DESIGN PATENTS AND TRADE DRESS.

Q: OKAY. WHAT KIND OF REMEDY DID YOU LOOK AT FOR VIOLATIONS OF APPLE'S UTILITY PATENT RIGHTS?

A: DIFFERENT COMBINATION THERE. LOST PROFITS AGAIN, WHICH I'VE ALREADY DESCRIBED, THAT'S APPLE'S LOSS.
BUT HERE I'VE CONSIDERED IN THE ALTERNATIVE WHAT'S CALLED A REASONABLE ROYALTY.

Q: OKAY. HOW DID YOU -- WHAT WAS YOUR BASIS FOR APPLYING A DIFFERENT KIND OF REMEDY FOR SOME KINDS OF PATENT RIGHTS THAN OTHERS?

A: IT'S MY UNDERSTANDING OF WHAT IS THE ACCEPTED DAMAGE METHODOLOGY TO BE USED, DEPENDING ON THE TYPE OF INTELLECTUAL PROPERTY. SO THAT'S WHY WE

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2047

SEE THE Q
MR. NOT
A SLIGHT CHANGE IN THE UTILITY PATENTS VERSUS DESIGN AND TRADE DRESS.
OKAY. COULD WE LOOK AT SLIDE 34B.75. WHAT IS SHOWN ON SLIDE 34B.75,
MUSIKA?

MR. PRICE: YOUR HONOR, I OBJECT. HE'S
A LAWYER. I OBJECT TO SHOWING HIM LAW.

THE COURT: I'VE OVERRULED THAT OBJECTION
IN MY ORDER OF LAST NIGHT, SO I'LL STILL OVERRULE IT.

THE WITNESS: YES. THIS IS THE DAMAGES DESCRIPTION UNDER THE LAW FOR DESIGN PATENT DAMAGES.

BY MS. KREVANS:

Q: AND IS THIS THE TEST YOU APPLIED, THAT IS, THAT THE -- IF THE DEFENDANT DID INFRINGE, THEY'RE FOUND LIABLE TO THE EXTENT OF TOTAL PROFIT?

A: RIGHT. KEEPING IN MIND, AGAIN, I'M MAKING NO DETERMINATION ON WHETHER THEY DID OR DIDN'T INFRINGE. I'M ACCEPTING THAT AS AN ASSUMPTION.
BUT, YES, HAVING DONE THAT, I'VE USED THE TOTAL PROFITS, AGAIN, OF SAMSUNG.

Q: OKAY. COULD WE SEE SLIDE 34B.76, WHICH IS HEADED TRADE DRESS DAMAGES.
IS THIS THE TEST FOR DAMAGES THAT YOU

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USED FOR TRADE DRESS VIOLATIONS?

A: YES. AND, AGAIN, WE CAN SEE IN THE ENUMERATION, ONE, DEFENDANT'S PROFITS, THAT WOULD BE SAMSUNG AGAIN; AND DAMAGES SUSTAINED BY PLAINTIFF, THAT WOULD BE LOST PROFITS; AND COSTS OF THE ACTION. I'M NOT GIVING ANY OPINION ON THAT THIRD PIECE.

Q: AND IF WE COULD SEE SLIDE 34B.74. THIS ONE IS JUST HEADED PATENT DAMAGES.
WHAT IS THIS TEST?

A: YES. AND THIS TEST BASICALLY SAYS THAT UNDER A UTILITY PATENT, THE PATENTEE IS ENTITLED TO DAMAGES ADEQUATE TO COMPENSATE FOR INFRINGEMENT, BUT UNDER NO EVENT LESS THAN A REASONABLE ROYALTY.
SO THAT'S WHY YOU USE THOSE TWO FORMS, LOST PROFITS OR, IN THE ALTERNATIVE, A REASONABLE ROYALTY.

Q: OKAY. YOU'VE TALKED, MR. MUSIKA, ABOUT THREE DIFFERENT FORMS OF DAMAGES AND 22 MILLION PHONES AND TABLETS.
DID YOU DO ANYTHING TO MAKE SURE THAT YOU WERE NOT DOUBLE COUNTING THE DAMAGES FOR ANY ONE OF THOSE PHONES AND TABLETS? A IDID.

Q: WHAT DID YOU DO?

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A: WELL, IT'S -- IT'S -- IT'S EASY TO VISUALIZE, BUT IT'S HARD TO IMAGINE.
BUT THE CALCULATION REALLY HAD TO BE DONE ON A PHONE-BY-PHONE, TABLET-BY-TABLET BASIS. EACH PHONE, EACH TABLET DESERVES OR GETS ITS OWN DAMAGE, AND SO THAT CALCULATION HAD TO BE DONE INDIVIDUALLY ON EACH ONE OF THOSE PRODUCTS.

Q: AND HOW DID YOU DECIDE, FOR EACH ONE OF THOSE PRODUCTS, WHICH OF THE THREE DIFFERENT KINDS OF DAMAGES YOU DESCRIBED SHOULD BE ASSIGNED TO IT?

A: WELL, THERE WERE SEVERAL CRITERIA. ONE WE JUST WENT THROUGH, WHICH IS THE FORM OF DAMAGES.
ANOTHER WOULD BE THE TIME PERIOD IN WHICH -- NOT ALL SALES OCCURRED AT THE SAME TIME. THEY OCCURRED AT DIFFERENT TIMES.
AND NOT ALL THE INTELLECTUAL PROPERTY, WHETHER IT WAS A UTILITY PATENT OR A DESIGN PATENT, THEY DIDN'T ALL ISSUE AT ONCE. SO THEY ISSUED AT VARIOUS POINTS IN TIME.
SO IT'S REALLY THE INTERSECTION OF WHEN SOMETHING WAS SOLD, WHICH FORM OF DAMAGES -- WHICH FORM OF INTELLECTUAL PROPERTY IT IS ACCUSED OF, AND THEN MAKING THAT CALCULATION ON, AGAIN, A UNIT-BY-UNIT BASIS.

Q: OKAY. COULD WE SEE SLIDE 34B.56.

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WHAT HAVE YOU DEPICTED ON THIS SLIDE, MR. MUSIKA?

A: I THINK THIS IS GOING TO HELP SHOW AND EXPLAIN WHAT I WAS JUST BRIEFLY TRYING TO EXPLAIN.
I'VE GOT 22 PHONES AT THE TOP, AND THINK OF THESE AS EITHER PHONES OR TABLETS, IT DOESN'T MATTER. BUT EACH ONE OF THOSE REPRESENTS A MILLION UNITS TO TRY AND KEEP US ORIENTED ON THE 22 MILLION TOTAL UNITS.
AND SO AS WE JUST WENT THROUGH, I HAVE THREE FORMS OF DAMAGE. EACH ONE OF THOSE PHONES, EACH ONE OF THOSE 22 MILLION PHONES, HAS TO GO IN ONE OF THOSE CATEGORIES, BUT NOT TWO CATEGORIES. IF WE PUT IT IN TWO CATEGORIES, THEN WE'RE GOING TO END UP WITH DOUBLE COUNTING.

Q: OKAY. CAN YOU JUST WALK US THROUGH, UNDERSTANDING THIS IS A SIMPLIFICATION, WALK US THROUGH THE ALLOCATION THAT YOU MADE.

A: WELL, THE ALLOCATION THAT I MADE WAS I, I FIRST -- I THINK THE NEXT SLIDE IS GOING TO SHOW THE AMOUNT OF 17 MILLION UNITS SHOULD SLIDE DOWN, AND I CALCULATED THEM AS SAMSUNG'S PROFITS. THAT'S THE UNJUST GAIN. SO I'M USING THAT FORM OF DAMAGES FOR APPROXIMATELY 17 MILLION OF THE TOTAL 22 MILLION.

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Q: OKAY. HOW MANY OF THE 5 MILLION LEFT DID YOU PUT IN THE APPLE LOST PROFITS DAMAGES CATEGORY?

A: I PUT TWO INTO THE LOST PROFITS CATEGORY, SO WE SHOULD HAVE TWO OF THOSE SLIDE DOWN, AND 2 MILLION, APPROXIMATELY, COME DOWN THERE.
AND THAT, OF COURSE, LEAVES THE 3 MILLION, AND YOU CAN OF COURSE GUESS WHERE THOSE GO, DOWN TO THE REASONABLE ROYALTY.
AND WE CAN SEE VERY CLEARLY THAT NO INDIVIDUAL PRODUCT HAS HAD MORE THAN ONE DAMAGE CALCULATED ON IT.

Q: OKAY. THAT LOOKED EASY.
CAN YOU DESCRIBE FOR THE JURY THE ACTUAL AMOUNT OF EFFORT THAT IT TOOK TO MAKE THESE ALLOCATIONS AND THEN MAKE THOSE ONE, ONE PHONE BY ONE TABLET DAMAGES CALCULATIONS THAT YOU MADE.

A: IT -- I CAN ASSURE YOU, IT'S NOT ME SITTING AT A DESK WITH A CALCULATOR DOING 22 MILLION CALCULATIONS.
IN FACT, BECAUSE OF THE VARIOUS COMBINATIONS, THERE ARE LITERALLY HUNDREDS OF MILLIONS OF CALCULATIONS, AND SO THE ONLY WAY, PRACTICALLY, TO DO THIS IS TO WRITE A COMPUTER PROGRAM.
AND SO OVER THE LAST YEAR AND A HALF TO

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TWO YEARS, I HAVE HAD A TEAM OF 20 PEOPLE, ECONOMISTS, PROGRAMMERS, STATISTICIANS AND C.P.A.'S DEVELOPING A MODEL THAT IS DYNAMIC ENOUGH TO TAKE IN ALL 22 MILLION AND MAKE CHANGES AND ADJUSTMENTS, SINCE THIS PROCESS WENT ON FOR A YEAR AND A HALF, AS NEW PRODUCTS CAME IN AND WENT OUT.
AND ABOUT 7,000 TOTAL PROFESSIONAL HOURS WERE DEDICATED TOWARDS THE CREATION AND OPERATION OF THAT COMPUTER MODEL.
Q A Q PEOPLE?

A: 20 PEOPLE, OVER MORE THAN A YEAR AND A HALF, THAT 7,000 HOURS, WAS APPROXIMATELY $1,750,000.
THAT SOUNDS EXPENSIVE. WAS IT EXPENSIVE? IT WAS VERY EXPENSIVE. WHAT DID IT COST TOTAL FOR YOUR TEAM OF 23

Q: OKAY. LET'S GO BACK TO THE FIRST CATEGORY YOU TALKED ABOUT, THE SAMSUNG PROFIT CATEGORY.
ONCE YOU HAD ALLOCATED 17 MILLION PHONES AND TABLETS TOTAL INTO THAT CATEGORY, WHAT WAS THE NEXT STEP IN DETERMINING THE DAMAGES FOR THOSE 17 MILLION DEVICES?

A: WELL, IT'S, IT'S MAKING THE ACTUAL CALCULATIONS. IT'S FIGURING OUT HOW MUCH -- WE NOW KNOW THE UNITS, BUT HOW MUCH DID SAMSUNG ACTUALLY MAKE ON THOSE 17 MILLION?

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Q: OKAY. IF WE COULD SEE THE NEXT SLIDE. WE'RE SHOWING $2.241 BILLION HERE.
CAN YOU EXPLAIN TO THE JURY HOW YOU CAME UP WITH THAT NUMBER IN CONCEPT?

A: IN CONCEPT, KEEP IN MIND THE 17 MILLION UNITS, AGAIN, AND IT'S -- IT'S FIGURING OUT HOW MUCH DID SAMSUNG ACTUALLY MAKE IN PROFIT ON EACH ONE OF THOSE UNITS, AS SIMPLISTICALLY MULTIPLICATION.
IT'S THE UNITS TIMES THE PROFITS AND THAT GETS YOU TO $2.2 BILLION.

Q: WHAT WAS THE SOURCE OF THE INFORMATION YOU USED FOR THE PURPOSES OF MAKING THESE CALCULATIONS?

A: THESE NUMBERS ARE, IN THIS CASE ARE SAMSUNG'S
NUMBERS. THESE ARE FINANCIAL

Q: OKAY. COULD WE SEE SLIDE 34B.15.
WHEN I'M TALKING ABOUT SAMSUNG'S PROFIT, NUMBERS THAT COME DIRECTLY FROM SAMSUNG'S RECORDS.
STARTING HERE -- I KNOW YOU HAVE A SERIES OF SLIDES HERE, MR. MUSIKA. CAN YOU WALK US THROUGH THE NATURE OF THE CALCULATION YOU DID TO ARRIVE AT THE $2.24 BILLION PROFIT NUMBER FOR THE $17 MILLION PHONES -- 17 MILLION PHONES?

A: YES. WELL, THERE'S THE $8.1 BILLION NUMBER AGAIN -- PARDON ME -- AND HOPEFULLY WE CAN REMEMBER THAT WAS THE TOTAL OF THE ACCUSED SALES.

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BUT KEEPING IN MIND, I'M CALCULATING THIS, THIS DAMAGE ONLY ON SAMSUNG'S PORTION.
SO THE FIRST THING I DO IS I HAVE TO REDUCE THAT NUMBER FOR THE UNITS THAT, THAT OTHER 5 MILLION UNITS THAT WENT TO OTHER FORMS OF DAMAGE. SO THAT'S THE FIRST DEDUCTION. I THINK THAT'S THE NEXT SLIDE.
AND I DEDUCT 1.749 BILLION BECAUSE I'M GOING TO CALCULATE DAMAGES ON A REASONABLE ROYALTY TO LOST PROFITS, AND THAT LEAVES ME $6,411,000,000.

Q: AND WHAT WAS THE NEXT STEP?

A: THE NEXT STEP IS WHAT WE ALL -- REGARDLESS OF WHAT BUSINESS WE'RE IN, ALL OF US INCUR THE SAME THING. WE HAVE REVENUE BECAUSE WE MAKE A SALE, AND WE HAVE EXPENSES. NOBODY JUST GIVES US MONEY. AND SAMSUNG INCURRED EXPENSES TO GENERATE THAT 6,411,000,000, SO I HAD TO IDENTIFY HOW MUCH DID IT COST SAMSUNG TO EARN OR GENERATE THAT 6,411,000,000.

Q: OKAY. SO LET'S SEE THE NEXT SLIDE.

A: AND THERE YOU SEE -- THERE YOU SEE THE COST OF GOODS SOLD, HOW MUCH DID IT COST, WHAT ARE THE DIRECTLY ATTRIBUTABLE COSTS THAT SAMSUNG INCURRED, AND THAT'S 4,170,000,000.
IF I SUBTRACT THAT FROM THAT PRIOR

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NUMBER, THAT GETS US DOWN TO THE BOTTOM, $2,241,000,000.

Q: OKAY. HAVE YOU DONE THIS CALCULATION FOR EACH OF THE DIFFERENT PRODUCTS ACCUSED OF VIOLATING ONE OF APPLE'S DESIGN OR TRADE DRESS PATENT RIGHTS? A YES.

Q: COULD WE SEE SLIDE 34B.19?
WHAT IS DEPICTED HERE, MR. MUSIKA?

A: THIS IS JUST A, AN ADDITIONAL SLIDE TO HELP THE COURT SEE THAT NOT ONLY DID I DO IT ON AN INDIVIDUAL TABLET-BY-TABLET, SMARTPHONE-BY-SMARTPHONE BASIS, BUT THOSE ARE BY MODEL, TOO.
SO HERE IS THAT SAMSUNG'S PROFITS DIVIDED, OR SHOWN BY MODEL, BOTH FOR TABLETS AND SMARTPHONES.

Q: OKAY. HAS SAMSUNG ALSO PROVIDED A CALCULATION IN THIS CASE OF WHAT IT SAYS ARE ITS PROFITS ON THIS SAME GROUP OF 17 MILLION DEVICES?

A: WELL, NOT TO CONFUSE ANYONE. MY NUMBER THAT I'VE JUST GIVEN YOU IS SAMSUNG'S NUMBER, TOO.
BUT I DEDUCTED CERTAIN COSTS AND SAMSUNG WOULD -- WOULD AND HAS SAID THAT THEY'VE INCURRED ADDITIONAL COSTS THAT SHOULD BE SUBTRACTED.
SO THERE'S NO DISPUTE ABOUT THE NUMBERS

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THAT I'M USING. IT'S JUST THAT THERE'S A DISPUTE ABOUT HOW MUCH -- HOW MANY COSTS SHOULD BE INCLUDED IN THE CALCULATION.

Q: COULD WE SEE PDX 34B.20.
WHAT HAVE YOU SHOWN ON THIS SLIDE, MR. MUSIKA?

A: THERE'S NO MATH IN THIS SLIDE. THERE'S JUST THREE NUMBERS. THE FIRST NUMBER IS THE FAVORITE NUMBER, OR THE OLD NUMBER WE KNOW, THE 8.1 BILLION TOTAL REVENUE. SO THAT'S THE REVENUE AT ISSUE.
THE MIDDLE NUMBER IS MY NUMBER OF WHAT THE UNJUST GAIN IS. THAT'S THE SAME $2.2 BILLION NUMBER.
BUT THE NUMBER ON THE RIGHT IS ANOTHER SAMSUNG CALCULATION WHICH TAKES MY 2.2 BILLION AND TAKES IT DOWN TO $1,086,000,000.

Q: AND WHAT IS -- SINCE YOU BOTH STARTED WITH THE SAME NUMBERS FROM SAMSUNG'S RECORDS, WHAT IS THE REASON FOR THE DIFFERENCE BETWEEN YOUR CALCULATION OF TOTAL PROFITS ON THESE 17 MILLION PHONES AND SAMSUNG'S CALCULATION OF TOTAL PROFITS ON THESE 17 MILLION PHONE?

A: WE'RE GOING TO SEE IT IN JUST A SECOND, BUT IT'S REAL SIMPLE. KEEP IN MIND I DEDUCTED COSTS WHICH ARE DIRECTLY ATTRIBUTABLE.

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SAMSUNG DEDUCTED THOSE COSTS AS WELL, BUT THEY DEDUCTED ADDITIONAL COSTS WHICH I DID NOT DEDUCT, AND WE'LL LOOK AT THOSE PRESENTLY.

Q: OKAY. WHY DON'T WE LOOK AT EXHIBIT 28. IT'S IN YOUR BINDER. AND COULD WE START SIMPLY BY YOU IDENTIFYING WHAT EXHIBIT 28 IS.

A: EXHIBIT 28 IS A -- THIS IS A SCHEDULE THAT I PREPARED USING SAMSUNG'S RECORDS, TRANSLATED RECORDS, FOR SEC AND I USED IT FOR PURPOSES OF LOOKING AT THE TYPES OF COSTS -- THIS WILL LIST ALL THEIR COSTS FROM TOP TO BOTTOM, AND WE'LL SEE THE KIND OF COSTS I DEDUCTED AND THE ADDITIONAL COSTS THAT SAMSUNG DEDUCTED.

(WHEREUPON, PLAINTIFF'S EXHIBIT NUMBER 28, HAVING BEEN PREVIOUSLY MARKED FOR IDENTIFICATION, WAS ADMITTED INTO EVIDENCE.)
BY

MS. KREVANS:

Q: YOU SAY YOU PREPARED THIS. WHAT WAS THE SOURCE OF THESE NUMBERS?

A: SAMSUNG RECORDS.

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Q: DID YOU CHANGE THE NUMBERS IN ANY WAY WHEN YOU PREPARED THIS SCHEDULE?

A: THE NUMBERS ARE -- THEY'RE IMPORTANT, BUT THEY'RE NOT THE NUMBERS. THEY'RE THE NUMBERS FOR THE OVERALL ENTITY. SO IT HAS OTHER SALES OF NON-ACCUSED ITEMS.
MY FOCUS IS REALLY MORE ON TERMS OF THE TYPES OF ACCOUNTS, BUT I DIDN'T CHANGE THIS. THIS COMES DIRECTLY -- THIS IS THE TYPE OF ACCOUNTS AND THE NUMBERS COME DIRECTLY FROM SAMSUNG.

Q: OKAY. COULD WE JUST MAKE A LITTLE LARGER, MR. LEE, THE TOP PORTION OF THIS DOWN THROUGH LINE, GROSS SALES PROFIT PERCENTAGE.
WHAT'S DEPICTED HERE, MR. MUSIKA?

A: SAMSUNG'S RECORDS ARE, ARE THE SAME AS, IN MANY OTHER SOPHISTICATED, SAME AS APPLE'S. THEY'RE PREPARED BASICALLY IN THE SAME FORMAT.
AND THE BASIC FORMAT OF A FINANCIAL STATEMENT, OR A PROFIT AND LOSS STATEMENT, IS NO DIFFERENT THAN OUR PERSONAL PROFIT AND LOSS STATEMENTS.
WE START AT THE TOP WITH HOW MUCH DID WE EARN, WHAT'S THE REVENUE? AND THEN WE DEDUCT EXPENSES.
STARTING AT THE TOP, THOSE EXPENSES ARE

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DIRECTLY ATTRIBUTABLE. AS YOU MOVE DOWN AND YOU GET TO WHERE PEOPLE USUALLY REFER TO IT, THE BOTTOM LINE, THOSE COSTS THAT ARE INCLUDED BECOME LESS AND LESS SPECIFICALLY ASSOCIATED WITH THE REVENUE.
SO HERE WE SEE REVENUE, QUANTITY AT THE TOP, AND THEN SALES IN TERMS OF TOTAL DOLLARS.

Q: AND I TAKE IT FROM WHAT YOU SAID A COUPLE MINUTES AGO, WHERE IT SAYS SALES $30 BILLION, YOU DIDN'T USE ALL 30 BILLION OF THOSE DOLLARS IN YOUR CALCULATIONS?

A: NO. AGAIN, THIS IS THEIR NUMBERS FROM THE SEC MANUFACTURING ENTITY THAT HAS SALES OF OTHER ITEMS IN THERE, SO I'VE ALREADY PULLED MY -- MY 8 BILLION, OR SAMSUNG'S 8 BILLION IS IN THAT $30 BILLION NUMBER IN THERE, BUT THERE ARE OTHER THINGS IN THERE AND WE SHOULDN'T BE FOCUSSED ON THOSE NUMBERS.

Q: OKAY. YOU SEE AT THE BOTTOM PORTION OF THIS EXHIBIT 28 THAT WE'RE LOOKING AT ON THE SCREEN RIGHT NOW, THERE ARE TWO LINES THAT SAY "GROSS SALES PROFIT" AND "GROSS SALES PROFIT PERCENTAGE."
WHAT ARE THOSE NUMBERS?

A: STANDARD ACCOUNTING TERMINOLOGY. SALES MINUS COST OF GOODS SOLD, THAT'S -- C.O.G.S. STANDS FOR COST OF GOODS SOLD, AND THOSE ARE COSTS WHICH ARE

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DIRECTLY ATTRIBUTABLE TO THE PRODUCTION AND/OR SALE OF THE ACCUSED DEVICES.
AND THIS IS -- AGAIN, THIS ISN'T MY CONSTRUCTION. THIS IS REALLY GENERALLY ACCEPTED ACCOUNTING PRINCIPALS AND THIS IS DIRECTLY FROM THEIR STATEMENTS.
AND THAT GETS US, IF WE DEDUCT THE COST OF GOODS SOLD FROM THE SALES, WE GET A GROSS PROFIT NUMBER AND PERCENTAGE.

Q: AND WHAT'S THE GROSS PROFIT PERCENTAGE?

A: GROSS PROFIT PERCENTAGE IS, IN THIS STATEMENT IS 39.2 PERCENT.

Q: WHAT WAS THE AVERAGE GROSS PROFIT AMOUNT THAT YOU FOUND IN SAMSUNG'S FINANCIAL RECORDS FOR THE $8 BILLION IN SALES OF THE ACCUSED PRODUCTS IN THE UNITED STATES?

A: ALL RIGHT. THE ACCUSED PRODUCTS HAVE SLIGHTLY LOWER GROSS PROFIT PERCENTAGE. PER MY RECOLLECTION, THE OVERALL GROSS PROFIT PERCENTAGE ON JUST THE ACCUSED PRODUCTS WAS APPROXIMATELY 35.5 PERCENT.

Q: OKAY. YOU SAID A COUPLE MINUTES AGO THAT IF WE MOVE DOWN THIS SAME PAGE OF EXHIBIT 28, WE'RE GOING TO SEE SOME OTHER KINDS OF EXPENSES. A YES.

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Q: DO YOU BELIEVE THAT THOSE OTHER EXPENSES ARE APPROPRIATE TO BE DEDUCTED IN CALCULATING SAMSUNG'S TOTAL PROFITS FOR PURPOSES OF DAMAGES IN THIS CASE?

A: FIRST OF ALL, SAMSUNG DEDUCTS ALL THOSE OTHER EXPENSES. THEY WERE INCURRED. I'M NOT DISPUTING THEY WERE INCURRED.
BUT I DO NOT THINK IT IS APPROPRIATE TO DEDUCT THOSE TO GET TO THE PROFIT NUMBER WHICH WOULD REWARD APPLE FOR SAMSUNG'S UNJUST ENRICHMENT.
SO REALLY ALL THE EXPENSES BELOW THERE ARE REALLY THE DISAGREEMENT.

Q: AND WHY DO YOU THINK THAT THOSE EXPENSES, THOSE OTHER EXPENSES, ARE NOT PROPERLY DEDUCTED IN CALCULATING SAMSUNG'S PROFITS?

A: I HAVE TWO VERY SPECIFIC REASONS.

Q: WHAT ARE THEY?

A: ONE REASON IS THAT THOSE COSTS, BY THEIR VERY NATURE AND HOW THEY'VE BEEN PUT ON THIS FINANCIAL STATEMENT, I KNOW, AS A C.P.A., THAT THEY ARE LESS AND LESS DIRECTLY ASSOCIATED WITH THE PRODUCT AT HAND. SO I KNOW THAT BASED ON SAMSUNG'S OWN REPRESENTATION.
SECONDLY, WHEN I TRIED TO INVESTIGATE HOW THEY WOULD PERHAPS TRY TO ALLOCATE THESE -- AND WHEN I SAY "TRY," DON'T MEAN THAT IN A NEGATIVE

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WAY, BUT IF YOU HAD A NON-DIRECT COST, THE ONLY WAY TO ASSIGN IT IS YOU HAVE TO DETERMINE SOME FORM OF ALLOCATION, AND WHEN I LOOK FOR THE ALLOCATION BASIS, THE RECORDS WERE UNRELIABLE.
SO FOR THOSE TWO PRIMARY REASONS, NO, I DID NOT INCLUDE THEM.

Q: OKAY. CAN YOU GIVE US AN EXAMPLE, FROM SAMSUNG'S ACTUAL EXPENSE CATEGORIES, OF SOMETHING THAT SAMSUNG INCLUDED IN ITS CALCULATION WHICH YOU DID NOT INCLUDE AND EXPLAIN WHY YOU THOUGHT IT WAS INAPPROPRIATE. A YES.MAYI? Q PLEASE.

A: R&D IS A GOOD EXAMPLE. R&D STANDS FOR RESEARCH AND DEVELOPMENT, AND CERTAINLY SAMSUNG ENGAGES IN RESEARCH AND DEVELOPMENT, AS DOES APPLE.
FROM AN ACCOUNTING STANDPOINT, IT'S CALLED MATCHING. WE WANT TO MATCH UP THE EXPENSES WITH THE REVENUE. WE DON'T WANT TO MATCH UP THE EXPENSES FOR PRODUCT A AND SUBTRACT THEM FROM PRODUCT B.
AND I KNOW, AGAIN, BASED ON MY OWN ACCOUNTING EXPERIENCE, THAT THE RESEARCH AND DEVELOPMENT COSTS, WHICH ARE INCURRED IN THE CURRENT TIME PERIOD, RELATE TO FUTURE EVENTS, OR

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FUTURE PRODUCTS, NOT TO THE CURRENT PRODUCTS. AND SO, AGAIN, FOR ANOTHER REASON THERE,
IT IS A COST THAT'S NOT A COST THAT'S ASSOCIATED WITH THESE ACCUSED PRODUCTS.

Q: OKAY. LET'S TURN TO THE SECOND REASON THAT YOU SAID YOU THOUGHT IT WAS INAPPROPRIATE TO INCLUDE THESE OTHER CATEGORIES, AND THAT WAS THAT YOU FOUND THE INFORMATION IN SOME WAYS TO BE UNRELIABLE.

A: YES, I DID.

Q: WHAT LED TO THAT CONCLUSION?

A: AS AN AUDITOR FOR THAT FIRST 10, 12 YEARS OF MY LIFE, AND REALLY DOING INVESTIGATIONS AFTERWARDS, WE AS AUDITORS ARE TAUGHT TO, TO APPLY SOMETHING CALLED PROFESSIONAL SKEPTICISM, EXERCISE OUR PROFESSIONAL JUDGMENT. WE SIMPLY DON'T TAKE FROM OUR CLIENTS OR FROM PARTIES THAT ARE PRODUCING FINANCIAL INFORMATION AND SAY, THAT MUST BE RIGHT.
WE GIVE IT -- IN SORT OF LAYMAN'S TERMS, WE GIVE IT A SMELL TEST AND SAY, DOES THIS MAKE SENSE? AND IN AUDIT LINGO, AGAIN, ARE THERE CERTAIN RED FLAGS?
AND I ENCOUNTERED A NUMBER OF RED FLAGS WITH SAMSUNG'S DATA BELOW THE GROSS PROFIT LINE.

Q: OKAY. COULD WE LOOK AT PDX 34B.23, PLEASE.

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WHAT IS SET OUT IN YOUR SLIDE 23, MR. MUSIKA?

A: WELL, I WAS GOING TO DO THIS PIECE BY PIECE. AS A TEACHER, I DON'T LIKE PEOPLE READING AHEAD, BUT -- GOOD.

Q: THANK YOU, MR. LEE.

A: SO, YES, THERE ARE FOUR RED FLAGS, AS YOU SAW. IT WAS TAKEN AWAY, BUT THE FIRST ONE IS,
IS THE INFORMATION THAT I'M PRESENTED WITH, DOES THAT TIE TO SOME RELIABLE SOURCE? SOME OTHER SOURCE, AN AUDITED FINANCIAL STATEMENT, A TAX RETURN, SOMETHING ELSE THAT I KNOW SOMEBODY ELSE IS LOOKING OVER THE COMPANY'S SHOULDER?

Q: AND WHAT DID YOU FIND WHEN YOU LOOKED AT THAT ISSUE?

A: I'M NOT SAYING IT DIDN'T TIE, BUT NOBODY DID TIE IT. I COULDN'T TIE IT, AND SAMSUNG DIDN'T RECONCILE OR TIE IT, EITHER. SO I WAS LACKING WITH THAT LEVEL OF COMFORT.

Q: WHAT WAS THE SECOND RED FLAG YOU LOOKED FOR?

A: THE SECOND ONE IS, IS THIS INFORMATION THAT'S USED TO RUN THE BUSINESS? WHEN WE SAY "ORDINARY COURSE," THIS IS INFORMATION THEY USE EVERY DAY. THIS ISN'T SOMETHING THAT'S PRODUCED FOR A SPECIAL PURPOSE.

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AND I FOUND THAT THAT'S NOT THE CASE. AGAIN, IT MAY HAVE BEEN A NECESSITY, BUT
NONETHELESS, I DIDN'T GAIN THE ADDITIONAL COMFORT OF SAYING, WELL, THIS IS A SCHEDULE THEY RAN THE BUSINESS FOR THE LAST TWO YEARS WITH.
NO, THIS IS INFORMATION THEY PREPARED FOR THE LITIGATION.

Q: WHAT WAS THE THIRD CATEGORY?

A: THE THIRD CATEGORY IS FREE OF ERRORS. SO AS YOU BEGIN TO LOOK AT THE INFORMATION THAT'S PRODUCED TO YOU -- EVERYBODY MAKES MISTAKES. I MAKE MISTAKES. WE ALL MAKE MISTAKES. IT'S THE FREQUENCY OF MISTAKES.
AND IN THE CASE OF SAMSUNG'S RECORDS, THERE WERE -- FOR A COMPANY AS SOPHISTICATED AND LARGE AS THEY ARE, THERE WAS TOO MANY MISTAKES.
WE WENT -- I WENT THROUGH EIGHT DIFFERENT VERSIONS AT LEAST OF DATA THAT WAS PRODUCED AND PULLED BACK BECAUSE OF INCORRECT TOTALS, BECAUSE IT WAS MISSING UNITS, BECAUSE OF INTERNAL INCONSISTENCIES.
AND AGAIN, I'M NOT SAYING THEY WERE INTENTIONALLY DOING IT, BUT I DIDN'T GET THE COMFORT OF SAYING, OH, AS I LOOK AT THIS DATA, IT ALL KIND OF MAKES SENSE.

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Q: WHAT WAS THE LAST CATEGORY THAT ACCOUNTANTS LOOK FOR IN TERMS OF RED FLAGS?

A: THE PARTIES WHO WERE RESPONSIBLE FOR THE DATA, DO THEY GIVE IT WILLINGLY OR DO THEY GIVE IT IN A FORUM, A FAIR DISCLOSURE, OR IS THERE SOMETHING ABOUT THE PRESENTATION THAT IS LESS THAN COMPLETE?

Q: AND WHAT DID YOU FIND ON THIS ISSUE?

A: I FOUND THAT IT WAS DIFFICULT TO GET THE INFORMATION, AND ULTIMATELY THERE WERE MANY AREAS I JUST COULDN'T GET AN EXPLANATION, SAMSUNG DIDN'T PROVIDE AN EXPLANATION.

A: I HAD TO STOP THE GROSS PROFIT LINE, ONE, BECAUSE IT WAS DIRECTLY ATTRIBUTABLE; AND TWO, BECAUSE ANY ALLOCATIONS OF THOSE LESS SPECIFIC COSTS JUST DIDN'T HOLD UP BECAUSE THERE WASN'T SUPPORT FOR IT AND WHAT I DID SEE WAS QUESTIONABLE.

Q: OKAY. LET'S TURN TO THE ISSUE OF WHICH DEFENDANT'S RECORDS YOU LOOKED AT.
WHO ARE THE DEFENDANTS IN THIS CASE?

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A: I'M GOING TO USE THE ABBREVIATIONS. I THINK THE COURT'S USED THE ABBREVIATIONS ALL ALONG. THERE ARE THREE DEFENDANTS, SEC, STA, AND SEA.

Q: AND WHOSE RECORDS DID YOU USE IN THE ANALYSIS YOU DID FOR PURPOSES OF THE COMPETING DAMAGES?

A: I USED ALL THREE COMPANIES' RECORDS.

Q: WHY DID YOU USE THE RECORDS OF ALL THREE?

A: AGAIN, AS A C.P.A., I KNOW THAT IF YOU WANT TO SEE A COMPLETE PICTURE OF ACTIVITY, YOU HAVE TO LOOK AT THE CONSOLIDATED ENTITY.
THERE HAVE BEEN MANY, MANY, FINANCIAL PROBLEMS IN THIS COUNTRY BY NOT REPORTING ON A CONSOLIDATED BASIS PARKING TRANSACTIONS IN SUBSIDIARIES.
MANY SUBSIDIARIES AND COMPANIES
AGAIN, I'M NOT SAYING THAT SAMSUNG HAS
DONE THAT.
BUT TO GET THE FULL PICTURE, I WANT TO LOOK AT THE CONSOLIDATED ENTITY.

Q: AND LET'S LOOK AT SLIDE 34B.24. FIRST OF ALL, USING THIS SLIDE, CAN YOU
EXPLAIN TO THE JURY THE CORPORATE RELATIONSHIP BETWEEN THE THREE ENTITIES YOU NAMED, SEC, SEA, AND STA?

A: YES. SEC, WHICH IS THE PARENT ORGANIZATION LOCATED IN KOREA, OWNS 100 PERCENT OF SEA. THEY

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OWN AND CONTROL IT. AS THE 100 PERCENT OWNER, THEY GET TO DECIDE WHAT SEA DOES.
LIKE, SEA IS THE 100 PERCENT OWNER OF
STA.
SO WHAT WE HAVE IS A, A COMPLETELY OWNED AND CONTROLLED GROUP OF COMPANIES UNDER THE CONTROL AND OWNERSHIP OF SEC.

Q: NOW, YOU USED THE WORD "CONSOLIDATED" IN YOUR ANSWER TO MY PREVIOUS QUESTION. WHAT DO YOU MEAN WHEN YOU SAY WE HAVE TO LOOK AT THESE RECORDS ON A CONSOLIDATED BASIS?

A: WELL, IT'S NOT UNCOMMON FOR COMPANIES, PARTICULARLY UNDER A COMMON CONTROL, TO HAVE TRANSACTIONS WITH EACH OTHER. AND WE JUST HEARD SOME TESTIMONY IN HERE THAT WAS PLAYED ABOUT STA AND SEA BUYING PRODUCT FROM SEC. THAT'S WHAT HAPPENS AND THAT'S WHAT YOU WOULD EXPECT TO HAPPEN.
BUT BECAUSE OF THE RELATED PARTY NATURE OF IT, AGAIN, AND BECAUSE OF THE CONTROLLER'S -- THE CONTROL RELATIONSHIP THAT SEC HAS, YOU HAVE TO LOOK AT THE CONSOLIDATED, YOU HAVE TO ADD THE THREE TOGETHER BECAUSE YOU'RE NOT -- YOU'RE GOING TO GET AN INCOMPLETE AND INACCURATE ECONOMIC PICTURE IF YOU LOOK AT JUST ONE ENTITY AND NOT ALL THREE TOGETHER.

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Q: OKAY. COULD WE LOOK AT SLIDE 34B.70, AND I KNOW, AGAIN, THIS IS A SERIES OF SLIDES THAT YOU HAD PREPARED FOR YOU, MR. MUSIKA.
CAN YOU WALK US THROUGH HERE AN EXPLANATION OF HOW THAT KIND OF INTERCOMPANY SALE AND TRANSFER THAT YOU JUST MENTIONED WORKS?

A: YES. THIS IS A REAL SIMPLE ANIMATION. YOU'VE GOT THE UNITED STATES ON THE RIGHT AND KOREA ON THE LEFT AND YOU HAVE SEC BASED IN KOREA AND WE HAVE STA AND SEA BASED IN THE UNITED STATES.
AND THERE'S OUR CONSUMERS, OUR PURCHASERS, UP THERE SOMEWHERE OFF THE COAST OF MAINE, I THINK.
AND WHAT HAPPENS IS THAT SEC SELLS THE PRODUCT TO, WE'LL SAY, STA, AND THE PHONES MOVE ACROSS THE PACIFIC AND LAND IN THE UNITED STATES.
STA, IN TURN, THEN SELLS THEM TO UNITED STATES CUSTOMERS, AND THAT'S WHERE WE GET THE $8.1 BILLION.

Q: LET ME JUST STOP YOU THERE FOR A SECOND.
THE FIRST STEP HERE, YOU SAID SEC MADE THE PHONES AND THEN SOLD THEM TO THEIR SUBSIDIARY, STA? A YES.

Q: WHO SET THE PRICE IN THAT SALE?

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A: WELL, AS I THINK YOU JUST HEARD FROM THE TESTIMONY PRIOR TO ME, TOO, SEC, AS THE CONTROLLING ENTITY, SAYS -- ESTABLISHES HOW MUCH THEY'RE GOING TO SELL IT TO THEIR SUBSIDIARY.

Q: OKAY. THEN YOU SAID STA NOW HAS THE PHONES IN THE UNITED STATES. THEY SELL THEM TO CONSUMERS?

A: THAT'S CORRECT.

Q: WHO SETS THE PRICE AT WHICH STA SELLS PHONES TO CONSUMERS?

A: SO WE DON'T CONFUSE ANYONE, WHEN WE SAY "CONSUMERS," I THINK YOU ALL KNOW BY NOW, THE CONSUMERS ARE THE CARRIERS. MOST OF THE COMPANIES SELL TO THE CARRIERS.

Q: "CARRIERS" MEANING PHONE COMPANIES?

A: YES.

Q: AND THAT'S A WHOLESALE PRICE TO PHONE COMPANIES?

A: YES, YES.

Q: WHO SETS THE WHOLESALE PRICE AT WHICH STA SELLS PHONES TO PHONE COMPANIES?

A: SEC, AGAIN, ESTABLISHES THAT PRICE.

Q: THE PARENT?

A: THE PARENT.

Q: THANKS. CAN YOU CONTINUE THEN WITH YOUR EXPLANATION?

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A: SURE. SO THE CARRIERS, CONSUMERS OR CARRIERS, PAY STA FOR THE PURCHASE OF THOSE PHONES IN THE UNITED STATES, AND I'M JUST GOING TO USE $100 AS A REAL SIMPLE EXAMPLE.

$100 IS PAID TO STA, BUT -- THERE'S THE $100, BUT STA HAS TO PAY ITS PARENT THE PRICE THAT THE PARENT SAID WE WANT FROM YOU, AND WHAT HAPPENS IS $97 IS PAID TO SEC.

NOW, THIS $97 AND THE $3 ARE ILLUSTRATIVE, BUT THEY'RE REPRESENTATIVE OF THE PERCENTAGES. FOR EVERY DOLLAR THAT STA MAKES IN THE U.S., IT'S REQUIRED, UNDER SEC'S CONTROL, TO SEND 97 TO 98 PERCENT OF THAT BACK TO SEC. THAT'S THE ARRANGEMENT THAT'S IN PLACE. ONLY 2 TO $3 OF EVERY $100 SOLD STAYS IN THE UNITED STATES, STAYS WITH STA. THE REST MOVES BACK TO SEC.

Q: AND HOW DOES THAT AFFECT STA AND SEA, THE TWO U.S. ENTITIES, HOW DOES THAT EFFECT THEIR FINANCIAL STATEMENTS?

A: WELL, YOU CAN SEE, IF YOU'RE LOOKING FOR THE ECONOMIC BENEFIT THAT'S ASSOCIATED WITH THIS ONE SALE OF $100 AND YOU LOOKED ONLY AT STA, YOU WOULD JUST SEE $3 OF PROFIT AND YOU WOULDN'T SEE THE $97 WHICH HAS BEEN TRANSFERRED BACK TO SEC.

SO YOU'VE GOT TO COMBINE OR CONSOLIDATE

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THEM TO SEE THE ENTIRE BENEFIT.

Q: WHY DO COMPANIES -- STRIKE THAT.
IS THERE A LEGITIMATE REASON FOR COMPANIES TO ARRANGE THEIR TRANSFER PRICING IN THIS WAY?

A: YES.

Q: AND WHAT IS THAT REASON?

A: IT'S -- IT'S TAX STRATEGY. BY MOVING $97 OVER TO SEC, THAT $97 ESCAPES U.S. TAXES. SO THE ONLY $3 OR APPROXIMATELY $2 --

MR. PRICE: I'M GOING TO OBJECT. THIS IS IRRELEVANT AND BEYOND THE SCOPE, AND MOTION IN LIMINE.

MS. KREVANS: YOUR HONOR, THIS IS EXACTLY THE PORTION OF THE TESTIMONY THAT YOU HAD PREVIOUSLY RULED HE CAN GIVE.

THE COURT: WELL, I'M GOING TO STRIKE HIS STATEMENT, THOUGH. IT'S STRICKEN.
YOU'LL HAVE TO ASK HIM ANOTHER QUESTION. BY

MS. KREVANS:

Q: FOR PURPOSES OF DETERMINING TOTAL PROFITS IN THIS CASE, WHOSE PROFITS DID YOU LOOK AT AS ACROSS THE THREE COMPANIES, SEC, STA, AND SEA?

A: I COMBINED ALL THREE.

Q: OKAY. AND EARLIER IN YOUR TESTIMONY YOU

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MENTIONED THAT YOU HAD TO LOOK AT TIME PERIODS IN CONNECTION WITH YOUR DAMAGE CALCULATION. WHY IS THAT?

A: I HAD TO LOOK AT TIME PERIODS BECAUSE, AS I SAID, YOU NEED THE INTERSECTION. NOT ALL THE INTELLECTUAL PROPERTY IS ISSUED AT THE SAME TIME, AND CERTAINLY NOT ALL THE SALES OF THE PRODUCTS OCCUR AT THE SAME TIME.

Q: WHEN DID YOU START THE CALCULATION OF DAMAGES FOR PURPOSES OF THE NUMBERS THAT YOU'VE EXPLAINED TO THE JURY?

A: APPROXIMATELY JUNE OF 2010.

Q: DID YOU START DAMAGE ON ALL PATENTS IN JUNE OF 2010?

A: NO, BECAUSE IF -- THAT'S WHEN THE FIRST ACCUSED SALE IS, AND IF -- IF THAT ACCUSED SALE INFRINGED ONE PATENT, THEN THERE WOULD BE DAMAGES ASSOCIATED WITH THAT ONE PATENT.
BUT IF PATENTS WERE ISSUED LATER, THEN THE CALCULATION WOULD NOT HAVE OCCURRED EARLIER.

Q: NOW, WITH RESPECT TO YOUR CALCULATION OF SAMSUNG'S PROFITS, IF THE JURY ULTIMATELY DECIDES THAT DAMAGES CALCULATION SHOULD START AT A LATER DATE THAN THE ONE YOU USED, HAVE YOU GIVEN THEM ENOUGH INFORMATION THAT THEY COULD ADJUST THEIR

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CALCULATION?

A: YES.

Q: AND WHERE IS THAT INFORMATION?

A: THE INFORMATION IS IN TWO PLACES. ONE WOULD BE THE JOINT EXHIBIT 1500, WHICH WE TALKED ABOUT A LITTLE BIT EARLIER, WHICH REALLY IS THE SUM OF ALL THE 22 MILLION UNITS AND THE $8 BILLION. SO WE HAVE -- YOU HAVE A CHRONOLOGICAL, BASICALLY -- YOU REMEMBER HOW I TALKED ABOUT THAT BEING HARD TO READ BECAUSE IT HAD INDIVIDUAL COLUMNS FOR EACH QUARTER?
SO IF THE DATE MOVES, YOU WOULD SIMPLY GO IN ALONG THAT SCHEDULE AND SAY -- DRAW A LINE AND SAY, WELL, OKAY, INFRINGEMENT IS NOT GOING TO START IN JUNE OF 2010. IT'S GOING TO START AT A LATER DATE. DRAW A LINE, AND ALL THE UNITS THAT WERE SOLD BEFORE THEN WOULD COME OUT OF THE CALCULATION. YOU WOULD MULTIPLY THAT REVENUE TIMES THE 35.5 PERCENT AND SUBTRACT THAT FROM THE $2.2 BILLION NUMBER.

Q: LET'S TURN NOW TO YOUR SECOND CATEGORY OF DAMAGES. IF WE COULD PUT BACK UP SLIDE 34B.61, I THINK IS WHERE WE ARE. YOUR SECOND CATEGORY IS APPLE'S LOST PROFITS.
AND IF WE COULD ADVANCE OUR SLIDE ONE CLICK, MR. LEE.

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WHAT NUMBER DID YOU CALCULATE FOR APPLE'S LOST PROFITS FOR THE $2 MILLION DEVICES THAT YOU ASSIGNED TO THAT CATEGORY?

A: TWO MILLION UNITS.

Q: SORRY. TWO MILLION UNITS YOU ASSIGNED TO THAT CATEGORY?

A: $488.8 MILLION.

Q: HOW DID YOU DETERMINE THAT THE AMOUNT OF APPLE'S LOST PROFITS ON THESE 2 MILLION UNITS WAS THIS, A LITTLE LESS THAN $500 MILLION?

A: I -- I APPLIED A FOUR-PART TEST TO SEE IF THE UNITS ACTUALLY DID QUALIFY FOR LOST PROFITS.
LOST PROFITS IS, AGAIN, OUR SECOND AND DIFFERENT TEST AND THE TEST IS DIFFERENT TO QUALIFY FOR LOST PROFITS, SO I WENT THROUGH THIS FOUR TEST TO SEE WHICH UNITS WOULD ACTUALLY QUALIFY.

Q: COULD WE SEE SLIDE 34B.32, PLEASE, MR. LEE.
WHAT WAS THE FIRST FACTOR YOU CONSIDERED IN SEEING IF THESE 2 MILLION UNITS QUALIFIED FOR LOST PROFITS?

A: THE PRESUMPTION HERE IS THAT APPLE WOULD HAVE MADE THE SALE. IF SAMSUNG DIDN'T, APPLE WOULD HAVE MADE THE SALE.
SO FIRST I WANTED TO BE SURE THAT THERE WAS ADEQUATE DEMAND FOR APPLE'S PRODUCT. IF THERE

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WAS NO DEMAND FOR IT, THEY CERTAINLY WOULDN'T MAKE THE SALE.

Q: JUST SO WE'RE CLEAR, WHAT YOU'RE TRYING TO TEST HERE IS WHEN SAMSUNG SOLD A PHONE, FOR EXAMPLE, DID THEY REALLY TAKE THAT SALE AWAY FROM APPLE, OR PERHAPS JUST FROM ANOTHER SUPPLIER OF PHONES?

A: THAT'S CORRECT.

Q: AND WHEN YOU LOOKED AT DEMAND, WHAT DID YOU FIND?

A: I FOUND THAT THERE WAS ADEQUATE EVIDENCE OF DEMAND, AND I THINK THAT'S RATHER STRAIGHTFORWARD, THAT APPLE'S IPHONES AND IPADS HAVE BEEN TREMENDOUSLY SUCCESSFUL AND THERE IS A SIGNIFICANT DEMAND IN THE MARKETPLACE FOR THEIR PRODUCTS.

Q: WHAT DO YOU MEAN BY DEMAND FOR APPLE'S INTELLECTUAL PROPERTY?

A: WHAT I MEAN BY DEMAND FOR APPLE'S INTELLECTUAL PROPERTY IS I LOOKED AT IT BOTH ON A, A PHONE, IPHONE-BY-IPHONE BASIS AND TABLET BASIS, AND I LOOKED AT THE INDIVIDUAL INTELLECTUAL PROPERTY AS WELL. SO WAS THERE DEMAND FOR THE FEATURES THAT ARE INCLUDED IN THE UTILITY PATENTS? WAS THERE DEMAND FOR THE DESIGN THAT'S INCORPORATED INTO THE DESIGN PATENTS AND THE TRADE DRESS?

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Q: THE THIRD THING YOU'RE SHOWING UNDER EVIDENCE OF DEMAND IS A CONJOINT SURVEY. WHAT ARE YOU REFERRING TO THERE?

A: WE HEARD LAST WEEK ABOUT DR. HAUSER'S CONJOINT ANALYSIS AND, YES, I KNOW THAT DR. HAUSER HAS ESTABLISHED THAT THERE WAS DEMAND FOR THE THREE UTILITY PATENTS IN HIS CONJOINT ANALYSIS. SO THAT ADDED TO THE WEIGHT OF MY CONCLUSION.

MR. PRICE: YOUR HONOR, I OBJECT TO HIM GIVING AN OPINION ABOUT DR. HAUSER'S RESULTS. HE CAN SAY HE RELIED ON THEM, BUT HE CAN'T -- HE CAN'T GIVE A SEAL OF APPROVAL. THERE'S BEEN NO ANALYSIS.

MS. KREVANS: YOUR HONOR, THIS IS DIRECTLY FROM HIS REPORT. HE REVIEWED THE REPORTS OF DR. HAUSER'S ANALYSIS. HE RELIED ON THEM.
THE ONLY PREVIOUS OBJECTION WE HAD ON THIS WAS SAMSUNG WANTED AN OPPORTUNITY TO CROSS-EXAMINE DR. HAUSER AND YOU GAVE THEM THAT LAST WEEK.

MR. PRICE: I HAVE NO OBJECTION TO HIM SAYING HE RELIED ON IT. HE'S NO EXPERT ON WHAT DR. HAUSER DID, SO HE CAN'T GIVE A SEAL OF APPROVAL. HE CAN SAY "I RELIED ON IT."

THE COURT: OVERRULED. GO AHEAD.

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THE WITNESS: I ANSWERED ALREADY, SO I APOLOGIZE IF I WAS TOO QUICK.

BY MS. KREVANS:

Q: YES. DID YOU LOOK AT ANY INTERNAL SAMSUNG DOCUMENTS IN EVALUATING THIS ISSUE OF DEMAND FOR APPLE PRODUCTS? A YES.

Q: COULD WE LOOK AT -- COULD YOU PLEASE TURN TO EXHIBIT 34 IN YOUR BINDER. LET ME KNOW WHEN YOU'RE THERE.

A: I AM THERE.

Q: IS EXHIBIT 34 A DOCUMENT YOU REVIEWED IN CONNECTION WITH FORMING YOUR OPINIONS IN THIS CASE? A YES.

Q: IS IT A SAMSUNG DOCUMENT PRODUCED IN THIS CASE? A ITIS.

MS. KREVANS: YOUR HONOR, WE MOVE THE ADMISSION OF EXHIBIT 34.

MR. PRICE: OBJECTION. NO FOUNDATION FOR FROM THIS WITNESS.

MS. KREVANS: YOUR HONOR, THE WITNESS HAS JUST ESTABLISHED THAT HE REVIEWED AND RELIED ON THE DOCUMENT. IT IS AN ADMISSION BY SAMSUNG.

THE COURT: IT'S ADMITTED.

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(WHEREUPON, PLAINTIFF'S EXHIBIT NUMBER 34, HAVING BEEN PREVIOUSLY MARKED FOR IDENTIFICATION, WAS ADMITTED INTO EVIDENCE.)

THE COURT: GO AHEAD. BY

MS. KREVANS:

Q: WHAT IS EXHIBIT 34, MR. MUSIKA?

A: THIS IS A FEASIBILITY REVIEW OR ANALYSIS OF THE SMARTPHONE MARKET BY SAMSUNG, BOTH IMPORTANTLY, OR SIGNIFICANTLY TO ME, ON THE -- AT A TIME WHICH IS DATED 9-2007 WHEN APPLE HAD FIRST ENTERED THE MARKET WITH ITS SMARTPHONES.

AND REMEMBER IN THAT GRAPHIC, THIS IS AT THE BEGINNING OF THE BLUE PERIOD WHEN SAMSUNG WAS GOING DOWN.
Q: COULD YOU PLEASE TURN TO PAGE 13 OF EXHIBIT 34.

A: I'M THERE.

Q: COULD YOU PLEASE DESCRIBE TO THE JURY WHAT INFORMATION ON THIS PAGE AFFECTED YOUR ANALYSIS.

A: YES. SO THE NUMBER 4 THERE IN THE MIDDLE, TO ORIENT OURSELVES, "MOBILE PHONE TRENDS UP TO 2012," AND WHAT SAMSUNG DOES THEN IS SAY, IN THE MIDDLE THERE, "OUR RESEARCH HAS IDENTIFIED FOUR KEY FACTORS THAT WE EXPECT WILL SHAPE HANDSETS IN THE
COULD YOU PLEASE TURN TO PAGE 13 OF EXHIBIT

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COME FIVE YEARS," AND THAT CIRCLE -- NUMBER ONE, THE APPLE IPHONE, THAT'S -- THAT'S THEIR DOCUMENT, I DIDN'T CIRCLE THAT. I HAVEN'T CHANGED THIS DOCUMENT. SO SAMSUNG HAS IDENTIFIED THE APPLE IPHONE AS SOMETHING THAT'S GOING TO SHAPE THE NEXT FIVE YEARS.

Q: AND THE DATE OF THIS DOCUMENT WAS SEPTEMBER 2007?

A: 2007, YES.

Q: OKAY. COULD YOU TURN TO PAGE 37 OF THIS DOCUMENT. AND LET ME KNOW AGAIN WHEN YOU'RE THERE.

A: I'M THERE.

Q: OKAY. WHAT IS THIS PORTION OF EXHIBIT 34 DEPICTING?

A: LISTED AT THE TOP IS "IPHONE EFFECT ANALYSIS," SO WHAT EFFECT THE IPHONE IS EXPECTED TO HAVE.

Q: AND, AGAIN, IS THIS FROM SEPTEMBER 2007?

A: THIS ENTIRE DOCUMENT IS FROM THAT TIME PERIOD, YES.

Q: OKAY. COULD YOU TURN TO THE SECOND PAGE OF THIS THREE-PAGE SECTION OF EXHIBIT 34 AND TELLS US WHAT IS INDICATED ON THIS PAGE THAT YOU TOOK INTO ACCOUNT IN YOUR OPINION?

A: YES. THE BOX THAT'S SORT OF AT THE RIGHT, THE TOP BOX, THAT'S CORRECT, IT SAYS "FACTORS THAT

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COULD MAKE IPHONE A SUCCESS." AND THEN THE FIRST BULLET UNDER THAT IS
"EASE AND INTUITIVE U/I," USER INTERFACE, "THAT COVERS ALL USER CLASSES, INCLUDING MALE, FEMALE, OLD AND YOUNG," AND THEN THE FIRST BULLET, "BEAUTIFUL DESIGN."

Q: AND HOW DID THOSE, THESE PORTIONS OF THE DOCUMENT EFFECT THE DEMAND FOR THE IPHONE?

A: WELL, THE FOCUS WAS ON IPHONE AND THE IDENTIFICATION BY SAMSUNG OF IPHONE AS BEING A DRIVER IN THE MARKETPLACE, SO OBVIOUSLY THAT'S REPRESENTATIVE OF DEMAND FOR THE IPHONE, AND IDENTIFYING BEAUTIFUL DESIGN AS BEING FURTHER -- OR EVIDENCE OF, OF DEMAND FOR DESIGN.

Q: COULD YOU TURN TO EXHIBIT 194 IN YOUR BINDER, PLEASE, MR. MUSIKA.

A: I'M THERE.

Q: WHAT IS -- STRIKE THAT.
IS EXHIBIT 194 A DOCUMENT THAT YOU CONSIDERED AND RELIED UPON IN FORMING YOUR OPINIONS ABOUT DEMAND FOR THE IPHONE? A YES.

(WHEREUPON, PLAINTIFF'S EXHIBIT NUMBER 194, HAVING BEEN PREVIOUSLY MARKED FOR IDENTIFICATION, WAS ADMITTED INTO EVIDENCE.)

BY MS. KREVANS:

Q: WHAT IS EXHIBIT 194, MR. MUSIKA?

A: IT'S A, AN INTERNAL E-MAIL FROM SAMSUNG EXECUTIVES TO OTHER SAMSUNG EXECUTIVES.

Q: AND THE DATE OF THIS DOCUMENT IS?

A: MARCH 2ND, 2010.

Q: AND WHO IS IT -- WHAT IS THE SUBJECT MATTER INDICATING?

A: THE SUBJECT SAYS "TO UX," USER EXPERIENCE, "EXECUTIVES."

Q: WHAT PART OF THIS MARCH 2ND, 2010 E-MAIL DID YOU FIND RELEVANT TO THE DEMAND OPINIONS THAT YOU FORMED?

A: GO DOWN ONE, TWO, THREE, FOUR, FIVE PARAGRAPHS AND HIGHLIGHT THAT. YES.
IT SAYS, "I AM NOT SAYING TO MAKE A UX THAT IS EXACTLY IDENTICAL TO THE IPHONE, BUT I AM

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SAYING TO LEARN THE WISDOM OF THE IPHONE AND RECOGNIZE THE STANDARD OF THE INDUSTRY WHICH WAS SET BY THEM ALREADY."

Q: LET'S TURN BACK TO YOUR SLIDE 34B.32, AND LOOK AT THE SECOND FACTOR YOU CONSIDERED, WHICH WAS MARKET ALTERNATIVES.
WHAT EVIDENCE DID YOU FIND WHEN YOU LOOKED AT MARKET ALTERNATIVES?

A: UM--

Q: AND LET ME FIRST ASK YOU, WHAT DO YOU MEAN BY "MARKET ALTERNATIVES"?

A: SO I THINK YOU PHRASED IT WELL, IS IF SAMSUNG DIDN'T MAKE THE SALE, WOULD APPLE HAVE MADE THE SALE?
SO IF, IF THERE WERE OTHER ALTERNATIVES IN THE MARKETPLACE, THEN APPLE WOULDN'T MAKE EVERY ONE OF THOSE 22 MILLION SALES. OF COURSE I DIDN'T CALCULATE LOST PROFITS ON THE 22 MILLION. YOU MAY RECALL IT WAS ONLY 2 MILLION.
PART OF THE REASON WAS BECAUSE ALTHOUGH I'M NOT OFFERING AN OPINION THAT THERE ARE MARKET ALTERNATIVES, I CONSERVATIVELY SAID, WELL, I'M JUST GOING TO ASSUME AND ACCEPT THAT SAMSUNG'S OTHER PRODUCTS AND THAT EVERY OTHER MARKET PARTICIPANT IS A MARKET ALTERNATIVE.

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Q: COULD YOU EXPLAIN TO US THE EVIDENCE THAT YOU FOUND WHEN YOU LOOKED AT THIS QUESTION.

A: I DID TWO, TWO RESTRICTIONS. ONE, I, I LOOKED AT THE TIME PERIOD AND I TOOK THAT TWO YEARS, BASICALLY THE TWO-YEAR TIME PERIOD OF 2010, 2011, 2012, AND I SHRUNK THAT -- SORRY -- I SHRUNK THAT DOWN. I ASSUMED THAT WITH EACH PATENT OR EACH TRADE DRESS THAT SAMSUNG WOULD SIMPLY NOT LEAVE THE MARKET, THAT THEY WOULD DO SOMETHING TO TRY TO GET BACK INTO THE MARKET.
SO I LIMITED MY CALCULATIONS TO LOST PROFITS TO ONLY A TIME PERIOD WHICH WOULD BE ASSOCIATED WITH THE TIME SAMSUNG WOULD BE OUT OF THE MARKET.
SO DEPENDING ON THE INTELLECTUAL PROPERTY, IT WAS AS LITTLE AS ONLY ONE MONTH OR AS HIGH AS EIGHT MONTHS, BUT NOT THE ENTIRE TIME PERIOD. SO THAT 22 MILLION SHRINKS DOWN TO EIGHT MONTHS OR ONE MONTH, RIGHT, BASED ON THAT.
AND THERE WAS ONE OTHER THING.

Q: YES, THE MARKET SHARE ALLOCATION. WHAT ARE YOU REFERRING TO THERE?

A: MARKET SHARE ALLOCATION, THERE WAS A FURTHER CUT. ONCE I GOT IT DOWN TO JUST THAT TIME PERIOD, THE SALES THAT WOULD HAVE BEEN MADE IN THAT TIME

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PERIOD, THEN I DISTRIBUTED THOSE SALES TO ALL THE MARKET PARTICIPANTS.
I ONLY PUT IN APPLE'S PILE THEIR MARKET SHARE. I GAVE BACK TO SAMSUNG THEIR MARKET SHARE. I GAVE NOKIA THEIR MARKET SHARE. I GAVE MOTOROLA THEIR MARKET SHARE.
SO THAT CARVED IT DOWN FURTHER AND THAT'S WHY I ONLY END UP WITH 2 MILLION OUT OF THAT 22 MILLION THAT QUALIFY FOR LOST PROFITS.

Q: WHAT WAS THE THIRD FACTOR YOU CONSIDERED IN DETERMINING HOW MANY OF THE 22 MILLION UNITS QUALIFIED FOR LOST PROFITS?

A: CAPACITY. COULD APPLE -- DID THEY HAVE THE FACILITIES TO ACTUALLY PRODUCE THIS AND SELL THIS?

Q: AND WHAT DID YOU FIND?

A: I FOUND THAT THEY DID. THERE WERE -- THERE WERE LIMITATIONS, AS -- BECAUSE THE DEMAND WAS SO HIGH, FROM TIME TO TIME, APPLE DID HAVE CONSTRAINTS.
BUT WITH RESPECT TO THIS 2 MILLION INCREMENTAL UNITS OVER THE TWO YEAR TIME PERIOD, APPLE, I CONCLUDED, DID HAVE THE ABILITY TO MAKE THOSE SALES.

Q: WHEN YOU SAY "THE ABILITY TO MAKE THOSE SALES," ARE YOU REFERRING TO MANUFACTURING

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CAPACITY?

A: MANUFACTURING AND MARKETING CAPACITY. IT COULD BE EITHER OR BOTH.

Q: AND WHAT WAS THE FOURTH FACTOR YOU USED IN DETERMINING WHETHER UNITS QUALIFIED FOR LOST PROFITS REMEDY?

A: IT'S JUST A CALCULATION OF APPLE'S PROFITS, AND I WAS ABLE TO CALCULATE HOW MUCH APPLE MAKES ON EACH ONE OF ITS SMARTPHONES OR TABLETS. AND ONCE AGAIN, IT'S SIMPLE MULTIPLICATION, TIMES 2 MILLION UNITS GAVE ME MY LOST PROFITS.

Q: LET'S GO BACK TO SLIDE 34B.62. IF YOU HAD NOT CONCLUDED THAT 2 MILLION OF THE DEVICES DID QUALIFY FOR LOST PROFIT DAMAGES, WHAT WOULD HAVE CHANGED IN YOUR ULTIMATE CONCLUSION?

A: WE WOULD JUST SLIDE THOSE PHONES UP BECAUSE THEY'RE ENTITLED -- UNDER THE ASSUMPTION THAT THEY'RE INFRINGING, THEY'RE GOING TO GET SOME FORM OF DAMAGE. SO I SLIDE IT UP TO SAMSUNG'S PROFITS -- I'M NOT DOUBLE COUNTING -- AND THE
RESULT IS, I THINK WE LOST PROFITS, BUT THE UP TO $2.481 BILLION.

Q: LET'S GO BACK TO WHICH YOU HAVE PHONES
CAN SHOW, WE DON'T HAVE ANY INFRINGING PROFITS NOW GOES
YOUR ORIGINAL APPROACH IN AND TABLETS IN ALL THREE

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CATEGORIES, AND LET ME ASK YOU ABOUT THE LAST CATEGORY, THE REASONABLE ROYALTY CATEGORY.

FIRST, COULD YOU EXPLAIN TO THE JURY IN CONCEPT WHAT IS MEANT BY A REASONABLE ROYALTY?
A: YES> I HAVE A SIMPLE LITTLE SLIDE THAT HELPS.

Q: 34B.42, PLEASE.

A: YES. A ROYALTY PAYMENT ISQ: LET ME STOP YOU RIGHT THERE. UNDER YOUR REAL ESTATE COLUMN ON THIS GRAPHIC, YOU HAVE WHAT LOOKS LIKE A PICTURE OF TWO HANDS SHAKING. WHY DO YOU HAVE THAT THERE?

A: WELL, IN THE TWO EXAMPLES, REAL ESTATE AND MINERAL RIGHTS, THE PARTIES GET TOGETHER AND ACTUALLY AGREE.

BUT HERE, WITHIN THE CONTEXT OF THE LITIGATION, THE REASON WE'RE ALL HERE,
UNFORTUNATELY, IS THE TWO PARTIES HAVEN'T AGREED. THEY HAVEN'T SHOOK HANDS AND AGREED. SO WE DON'T HAVE AN AGREEMENT.

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Q: AND WE SEE THE WORDS, UNDER PATENTS, "HYPOTHETICAL NEGOTIATION." WHAT DO YOU MEAN BY THAT?

A: WELL, IT'S A -- IT'S CALLED A LEGAL FICTION. THE PARTIES HAVEN'T -- IN FACT, APPLE HAS TAKEN THE POSITION THAT THEY DON'T WANT A ROYALTY. THEY DON'T WANT TO LICENSE THEIR INTELLECTUAL PROPERTY.

BUT AS A FLOOR, REMEMBER THAT, THAT ONE STATUTE THAT WE WERE READING, THAT'S A MINIMUM
AMOUNT OF DAMAGES FOR THE UTILITY PATENTS.

AND IT'S A LEGAL FICTION THAT I'M ASKING
TO TRY TO IDENTIFY WHAT AMOUNT WOULD OR SHOULD -- I'M SORRY -- WHAT AMOUNT SHOULD SAMSUNG PAY APPLE FOR THE USE OF THEIR INTELLECTUAL PROPERTY, EVEN THOUGH APPLE DOESN'T WANT IT?

Q: AND DID YOU REACH A CONCLUSION ON WHAT THE RIGHT ROYALTY RATES SHOULD BE FROM THIS HYPOTHETICAL NEGOTIATION?

A: YES. I DID A NUMBER OF EVALUATION TECHNIQUES AND I DID SOMETHING CALLED A GEORGIA PACIFIC ANALYSIS, AND THEN I ULTIMATELY IDENTIFIED THE RATES, THE ROYALTY RATES TO BE PAID TO APPLE FOR ITS ASSET.

Q: WHAT METHODS DID YOU USE TO IDENTIFY THE RANGE OF POTENTIAL VALUES FOR THIS HYPOTHETICALLY
DAMAGES FOR THE UTILITY PATENTS. AND IT'S A LEGAL FICTION THAT I'M ASKING IDENTIFY WHAT AMOUNT WOULD OR SHOULD -- -- WHAT AMOUNT SHOULD SAMSUNG PAY APPLE

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NEGOTIATED LICENSE PAYMENT?

A: RIGHT. I USED THREE VALUATION METHODS: A COST METHOD; AN INCOME METHOD; AND A MARKET METHOD.

Q: WHAT ARE EACH OF THOSE METHODS, JUST BRIEFLY?

A: I THINK, AGAIN, EASY REAL ESTATE, A MARKET IS A COMPARABLE, SO IT'S A HOUSE DOWN THE STREET THAT'S LIKE YOURS. THAT'S A COMPARABLE.

IN THIS CASE IT WOULD BE A LICENSE. ARE THERE OTHER LICENSES THAT ARE LIKE THE LICENSE THEY WOULD ENTER INTO?

COST WOULD BE HOW MUCH DID SAMSUNG OR APPLE PAY TO DEVELOP IT OR DESIGN AROUND IT?

AND INCOME IS INCOME DRIVEN, HOW MUCH REVENUE IS BEING PRODUCED BY SAMSUNG AND/OR APPLE USING THESE PATENTS.

AND WE DISCOUNT THAT BACK AND CAPITALIZE
THAT.

Q: AND YOU MENTIONED SOMETHING CALLED THE GEORGIA PACIFIC FACTORS. WHAT ARE THOSE -- THOSE OF US OLD ENOUGH TO REMEMBER KNOW THAT GEORGIA PACIFIC WAS A LUMBAR AND PAPER COMPANY. WHAT DOES THAT HAVE TO DO WITH THIS CASE?

A: I THINK THEY STILL ARE. IT'S A CASE REFERENCE. GEORGIA PACIFIC WAS INVOLVED IN A PATENT SUIT AND THE COURT IDENTIFIED 15 FACTORS,

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QUESTIONS TO ASK TO TRY TO GUIDE THIS HYPOTHETICAL NEGOTIATION. AND NOT ALL 15 FACTORS WOULD NECESSARILY APPLY, BUT I LOOKED AT ALL 15 FACTORS AND APPLIED THEM TO GET TO MY FINAL RATE.

Q: CAN YOU GIVE US SOME EXAMPLES OF SOME OF THE GEORGIA PACIFIC FACTORS THAT DID APPLY HERE AND THAT YOU TOOK INTO ACCOUNT IN CALCULATING WHAT YOU DETERMINED TO BE A REASONABLE ROYALTY HERE?

A: SURE. FACTOR NUMBER 1 IS HAS THERE BEEN A LICENSE OF THE INTELLECTUAL PROPERTY? AND YOU JUST HEARD THE EXCHANGE, NO, THERE HAS NOT BEEN A LICENSE OF INTELLECTUAL PROPERTY, UTILITY, OR DESIGN AND APPLE DOESN'T WANT TO LICENSE IT.

THE EXTENT OF BENEFIT, THERE'S ANOTHER FACTOR, THE EXTENT OF BENEFIT OBTAINED BY THE ACCUSED INFRINGER. AND HERE WE'VE SEEN $8 BILLION OF REVENUE AND $2.4 BILLION OF INCOME. SO THAT IS PART OF THE GEORGIA PACIFIC FACTORS.

Q: COULD WE SEE SLIDE 34B.51, PLEASE, MR. LEE.

COULD YOU EXPLAIN TO THE JURY THE ULTIMATE CONCLUSION THAT YOU DREW ABOUT WHAT REASONABLE ROYALTIES WOULD HAVE RESULTED FROM THIS HYPOTHETICAL NEGOTIATION, TAKING INTO ACCOUNT THE FACTORS THAT YOU MENTIONED.

A: SO I IDENTIFY AN INDIVIDUAL RATE FOR EACH OF

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AND THEN FOR THE DESIGN ELEMENTS, THAT BEING THE DESIGN PATENTS AND THE TRADE DRESS, I LOOKED AT THOSE AS A GROUP, RECOGNIZING THAT APPLE WOULD NOT, AND REALLY COULD NOT LICENSE THAT OUT.

YOU CAN'T BASICALLY LICENSE A
TAKE YOUR IDENTITY, YOU CAN'T TAKE WHAT YOU'VE BUILT YOUR COMPANY AROUND AND LICENSE A PIECE OF THAT.

SO I DEVELOPED MY RATE THAT WOULD BE FOR
ONE OR ALL OF THE DESIGN PATENTS OR TRADE DRESS.

Q: WHY IS THE DESIGN NUMBER SO MUCH HIGHER THAN THE OTHERS?

A: IT'S -- IT'S -- WELL, WE'VE BEEN HERE TWO WEEKS, I GUESS, TWO AND A HALF WEEKS. IT'S WHAT APPLE HAS SAID -- AND ONE OF THE OTHER GEORGIA PACIFIC FACTORS THAT I DIDN'T MENTION WAS, I THINK IT'S FACTOR 2, IS THE DEGREE OF COMPETITION OR HOW -- IS THIS SOMEONE THAT DIDN'T COMPETE DIRECTLY?

THESE ARE TWO MAJOR COMPETITORS COMPETING FOR $8 BILLION, AND APPLE HAS COME INTO THE MARKET ON THE BASIS OF ITS DESIGN AND HAS INDICATED REPEATEDLY THEY DON'T WANT TO LICENSE THEIR DESIGN, AND THE DESIGNS ARE OF CRITICAL ECONOMIC IMPORTANCE

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TO APPLE, AND THAT'S WHY YOU END UP WITH SUCH A HIGH NUMBER.

Q: CAN YOU TELL US WHETHER OR NOT YOU TOOK SAMSUNG'S PROFITS AND APPLE'S PROFITS INTO ACCOUNT IN DETERMINING A HYPOTHETICAL REASONABLE ROYALTY? A YES.

Q: WHERE DID YOU GET THE NUMBERS THAT YOU USED FOR THE APPLE PROFITS PORTION OF THAT CALCULATION?

A: FROM APPLE'S AUDITED FINANCIAL STATEMENTS.

Q: LET'S GO BACK TO YOUR SLIDE WITH THE THREE CATEGORIES, 34B.65 NOW. AND GO AHEAD AND PUT UP THE REASONABLE ROYALTY NUMBER.

A: $21,240,000 FOR THOSE THREE MILLION UNITS.

Q: NOW, IF WE LOOK AT THE TOP TWO NUMBERS ON THIS CHART, THE SAMSUNG PROFIT NUMBER AND THE APPLE LOST PROFIT NUMBER, IS THAT $24 PER UNIT NUMBER WE SAW FOR DESIGN PATENTS, IS THAT INCLUDED IN ANY OF THE NUMBERS WE SEE THERE? A NO.

Q: WHY NOT?

A: BECAUSE I DIDN'T -- MAYBE I MISSED THE QUESTION. I'M NOT DOUBLE COUNTING. I'M CALCULATING THE REASONABLE ROYALTY ONLY ON THE REMAINING PHONES FOR WHICH I DID NOT CALCULATE THE LOST PROFIT OR INFRINGING PROFIT.

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Q: OKAY. IF, INSTEAD OF CALCULATING FOR THE 17 MILLION PHONES AND TABLETS IN THE TOP LINE AND THE 2 MILLION PHONES AND TABLETS IN THE MIDDLE LINE SAMSUNG PROFITS AND APPLE'S LOST PROFITS, IF YOU HAD JUST DONE A REASONABLE ROYALTY FOR ALL 22 MILLION UNITS, WHAT WOULD THAT NUMBER HAVE BEEN?

A: RIGHT. THAT'S 500 -- IT'S APPROXIMATELY 540 --

MR. PRICE: OBJECT TO THAT. THAT'S BEYOND THE SCOPE OF HIS REPORT.

MS. KREVANS: YOUR HONOR, THIS IS IN THE SUPPLEMENTAL EXPERT REPORT AT EXHIBIT 19-S IN THE MIDDLE COLUMN.

THE COURT: THAT'S OVERRULED. GO AHEAD. THE WITNESS: IF YOU SLID ALL THE PHONES,
AS COUNSEL HAS SAID, OVER AND DOWN INTO REASONABLE ROYALTY AND CALCULATED DAMAGES AGAIN AS A FLOOR, A MINIMUM AMOUNT, NO LOST PROFITS, NO REASONABLE -- AND NO INFRINGER'S PROFITS, THE AMOUNT IS APPROXIMATELY $540 MILLION, STANDALONE.

BY MS. KREVANS:

Q: LOOKING AT THE NUMBERS THE WAY YOU DID CALCULATE THEM IN THE THREE SEPARATE BUCKETS, WHAT IS THE TOTAL DAMAGES THAT YOU CALCULATED THAT YOU

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BELIEVE SAMSUNG SHOULD PAY IN THIS CASE IF THE JURY FINDS THAT APPLE'S INTELLECTUAL PROPERTY IS VALID AND INFRINGED?

A: SUMMING THE THREE UP, THE TOTAL NUMBER COMES TO $2,751,000,000.

Q: COULD YOU TURN TO EXHIBIT 25 IN YOUR BINDER. I'M SORRY, THIS IS 25A-1.

A: YES.

Q: WHAT IS 25A-1, MR. MUSIKA?

A: THIS IS A SUMMARY OF SOME OF THE CALCULATIONS THAT I'VE BEEN TALKING ABOUT THIS MORNING.

Q: AND WHO PREPARED EXHIBIT 25A-1?

A: MY TEAM UNDER MY DIRECTION.

MS. KREVANS: YOUR HONOR, WE OFFER EXHIBIT 25A-1.

MR. PRICE: NO FURTHER OBJECTION.

THE COURT: OKAY. IT'S ADMITTED.

(WHEREUPON, PLAINTIFF'S EXHIBIT NUMBER 25A-1, HAVING BEEN PREVIOUSLY MARKED FOR IDENTIFICATION, WAS ADMITTED INTO EVIDENCE.)

MS. KREVANS: OKAY. COULD YOU, JUST BRIEFLY, MR. MUSIKA, WALK THE
JURY THROUGH WHAT INFORMATION IS SET OUT ON EACH PAGE OF EXHIBIT 25A-1?

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A: YES. SO I'LL USE MY BOOK, AND I ASSUME THAT YOU'LL MOVE THE SCREEN AS I TALK.

SO PAGE 2 OF 16 IS JUST THE SUMMARY OF DAMAGES, WHAT WE JUST LOOKED AT.

PAGE 3 OF 16 --

Q: LET ME STOP YOU FOR A MOMENT ON PAGE 3. YOU SEE AT THE BOTTOM THERE'S A NOTE?

A: YES.

Q: WHAT DOES THAT NOTE EXPLAIN?

A: THAT EXPLAINS THE, THE TIME PERIODS THAT WERE USED FOR THE CALCULATION OF THE DAMAGES.

Q: AND WHAT DOES IT INDICATE THOSE TIME PERIODS WERE?

A: IT INDICATES THAT THE TIME PERIODS THAT I USED FOR THE REGISTERED TRADE DRESS WAS BASICALLY THE START OF THE INFRINGING TIME PERIOD.

Q: THAT'S FOR THE UNREGISTERED TRADE DRESS?

A: THE UNREGISTERED TRADE DRESS.

Q: AND FOR THE REST?

A: AND FOR THE REST I USED AUGUST 4TH, 2010 AS THE START DATE.

Q: THANK YOU. COULD YOU CONTINUE EXPLAINING TO THE JURY WHAT THE CONTENTS OF PX 25 ARE.

A: YES. PAGE 3 OF 16 IS JUST THE MATRIX. YOU SEE THE PRODUCTS THERE ON THE LEFT AND ALL THE

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FORMS OF INTELLECTUAL PROPERTY THAT HAVE BEEN IDENTIFIED THERE, WHICH PRODUCTS ARE ACCUSED OF INFRINGING WHICH OF THE INTELLECTUAL PROPERTY.

THE NEXT PAGE IS JUST A SUMMARY OF, A MORE DETAILED SUMMARY BY PRODUCT OF THE FOLLOWING PHONES THAT WE WENT THROUGH. IT'S JUST DIFFERENT CALCULATIONS.

THE SAME IS TRUE OF 5 OF 16.

6 OF 16 IS A LISTING OF PRODUCTS AND THE CARRIERS THAT ARE ASSOCIATED WITH EACH PRODUCT.

Q: SO THE -- THIS IS JUST WHICH PHONE COMPANIES ARE PROVIDING THEIR CUSTOMERS WITH WHICH SAMSUNG PRODUCTS?

A: THAT'S CORRECT.

Q: THANK YOU. AND YOU HAVE A SERIES OF PAGES THAT ARE HEADED "MOR-FLO ANALYSIS."

A: THAT'S 7 THROUGH 12.

Q: WHAT ARE THOSE?

A: THAT'S THE MARKET SHARE ALLOCATIONS. THAT'S WHERE I LIMITED THE NUMBER OF PHONES THAT APPLE WOULD GET BECAUSE I'VE ALLOCATED PERCENTAGES TO THE OTHER MARKET PARTICIPANTS, AND THOSE ARE THOSE CALCULATIONS.

Q: THAT TAKES US TO PAGE 13, AND WHAT IS SET OUT ON PAGE 13?

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A: PAGE 13 IS A STUDY DONE, I THINK IT WAS DONE BY IBM, BUT IT WAS DONE BY SOMEONE ELSE WHICH REALLY LOOKED AT THE PERCENTAGE OF USERS THAT WOULD SWITCH CARRIERS, AND THAT WAS ANOTHER LIMITING FACTOR THAT I USED.

Q: OKAY. LET'S -- MR. LEE, DON'T SHOW IT IN COURT, BUT JUST SHOW THE JURORS PAGES 14 AND 15.

YOUR HONOR, I'D NOTE FOR THE RECORD THAT THESE TWO PAGES, PER A PRIOR ORDER OF THE COURT, HAVE BEEN PERMITTED TO BE REDACTED AND FILED UNDER SEAL AND WE HAVE PROVIDED BOTH THE REDACTED AND UNREDACTED COPIES TO THE COURT.

AND MR. MUSIKA, CAN YOU TELL US WHAT INFORMATION IS SET OUT ON PAGES 14 AND 15?

A: 16 IS THE RATES THAT WE JUST LOOKED AT, AND IT GIVES A LITTLE MORE DETAILS ABOUT THE THREE VALUATION METHODOLOGIES I USED.

Q: JUST TO FINISH UP, MR. MUSIKA, COULD YOU SUMMARIZE FOR THE JURY YOUR OVERALL DAMAGES OPINION IN THIS CASE?

A: YES. WHERE I BEGAN, THE DAMAGES ARE A RANGE

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BETWEEN $2.5 BILLION AND AT THE HIGH END, $2,750,000,000.

Q: AND WHAT IS THE DIFFERENCE BETWEEN THE BOTTOM AND THE TOP OF THAT RANGE?

A: ONE ASSUMES -- YOU REMEMBER WE WERE SLIDING THE PHONES, THAT WE BASICALLY -- THE LOWER END NUMBER IS JUST ALL OF SAMSUNG'S UNJUST ENRICHMENT, PLUS A REASONABLE ROYALTY.

THE HIGHER NUMBER WAS SAMSUNG'S UNJUST ENRICHMENT, LOST PROFIT ON THOSE 2 MILLION, PLUS THE REASONABLE ROYALTY.

MS. KREVANS: THANK YOU. NOTHING FURTHER, YOUR HONOR.

THE COURT: ALL RIGHT. THE TIME IS NOW 11:20.

CROSS-EXAMINATION

BY MR. PRICE:

Q: GOOD MORNING, MR. MUSIKA.

A: GOOD MORNING.

Q: MY NAME IS BILL PRICE.
AND I WANTED TO ASK YOU, BEFORE WE GET INTO YOUR METHODOLOGIES, YOU SAID YOU'VE DONE THIS A NUMBER OF TIMES, THIS SORT OF ANALYSIS; CORRECT?

A: YES.

Q: AND YOU'VE DONE IT IN CONNECTION WITH

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LITIGATION?

A: YES.

Q: AND I JUST WANT TO SEE HOW YOU APPROACH THAT AS AN EXPERT. IT'S YOUR UNDERSTANDING THAT YOU ARE SUPPOSED TO KIND OF APPLY YOUR EXPERTISE IN A NEUTRAL FASHION; CORRECT?

A: THAT'S CORRECT.

Q: YOU'RE NOT SUPPOSED TO FAVOR ONE PARTY OVER THE OTHER; RIGHT?

A: THAT'S CORRECT.

Q: YOU'RE GOING TO GIVE THE SAME OPINION REGARDLESS OF WHICH SIDE HIRES YOU? THAT'S THE IDEA?

A: THAT IS THE IDEA.

Q: AND IN THAT CONNECTION, YOU KNOW THAT IT WOULD BE INAPPROPRIATE, THEN, FOR YOU AS AN EXPERT TO BE AN ADVOCATE? THAT IS, YOU'RE SUPPOSED TO BE OBJECTIVE USING YOUR EXPERTISE?

A: I WOULD AGREE.

Q: AND -- NOW, WE LOOKED AT A LOT OF SLIDES. I ASSUME THAT YOU REVIEWED THOSE SLIDES BEFORE THEY WERE PRESENTED TO THE JURY.

A: YES.

Q: AND EITHER YOU CREATED THEM OR, LIKE THE PRESIDENTIAL ADS, YOU APPROVED OF THEM?

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A: YES.

Q: AND WERE THERE ANY THAT YOU CREATED VERSUS APPROVED, OR --

A: I DON'T MAKE THAT DISTINCTION, NO.

Q: OKAY. AND IF WE COULD LOOK AT, FOR EXAMPLE, I THINK IT WAS SLIDE 34B.2, AND I'M JUST WONDERING, FOR EXAMPLE, WITH THIS SLIDE -- I'M NOT GETTING ANYTHING OUT OF THIS.
OKAY. SO ON THIS SLIDE, YOU SEE ON THE RIGHT HERE THERE'S A SAMSUNG PHONE. DO YOU SEE THAT?

A: I DO.

Q: AND DID YOU SELECT THAT PICTURE?

A: THE INDIVIDUAL PHONE?

Q: YES.

A: NO. I THINK THAT -- THIS -- THE SLIDE ITSELF WAS CONSTRUCTED ORIGINALLY BY ME, BUT THERE'S A TEAM OF, OF GRAPHICS PEOPLE THAT, THAT PUT IN THE ICONS ULTIMATELY. SO, NO, I DIDN'T SELECT THAT PHONE.

Q: I JUST WANT TO -- YOUR UNDERSTANDING IS THAT APPLE IS NOT CLAIMING THAT YOU HAVE TO USE HARD KEYS ON A PHONE; RIGHT?

A: THAT IS NOT MY UNDERSTANDING, NO.

Q: AND IT'S YOUR UNDERSTANDING THAT APPLE IS NOT

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CLAIMING THAT YOU CAN'T HAVE, YOU KNOW, A BIG SCREEN ON A PHONE; RIGHT?

A: THAT IS CORRECT.

Q: AND THEY'RE NOT CLAIMING THAT YOU CAN'T HAVE OVAL SPEAKER; RIGHT?

A: THAT IS MY UNDERSTANDING ALSO, YES.

Q: SO WHEN APPLE CAME OUT, YOUR UNDERSTANDING WAS, WAS AT LEAST AS FAR AS THIS CASE IS CONCERNED, THAT THERE'S NO CLAIM THAT A COMPETITOR COULDN'T COME OUT WITH A, A PHONE THAT HAD VIRTUAL KEYS? DO YOU KNOW WHAT I'M TALKING ABOUT?

A: YES, I DO.

Q: THAT HAD A BIG SCREEN; RIGHT?

A: YES.

Q: OR AN OVAL SHAPED SPEAKER AT THE TOP; RIGHT?

A: YES.

Q: SO THEN WHEN YOU WENT TO YOUR AFTER -- AFTER APPLE CAME OUT, I THINK YOU WENT TO SLIDE 34B.4, OR ONE OF THESE, AND YOU SEE YOU CHOSE THIS PHONE ON THE RIGHT --

A: YES.

Q: -- TO PUT IN THIS COMPARISON.
NOW, THERE ARE HOW MANY PHONES INVOLVED IN THIS CASE?

A: OH, 28 OR SOMETHING LIKE THAT. I DON'T

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REMEMBER EXACTLY.

Q: WELL, I'M WONDERING, LIKE, WHY DIDN'T YOU CHOOSE -- LET'S SEE IF I CAN FIND -- THIS IS EXHIBIT 1011. IT'S ALREADY IN EVIDENCE. IT'S THE CAPTIVATE.
YOU'VE SEEN THIS PHONE BEFORE?

A: I CAN'T SEE IT FROM HERE.

Q: OKAY.
MAY I APPROACH?

THE COURT: PLEASE, GO AHEAD.

BY MR. PRICE:

Q: YOU'VE SEEN THAT PHONE BEFORE?

A: I BELIEVE I HAVE, YES.

Q: AND THAT PHONE, WITHOUT MY HANDS ON IT, LET'S PUT UP SDX 3909.4, I THINK.
AND BY THE WAY, THIS PHONE, IN YOUR CALCULATIONS, ACCOUNTS FOR ABOUT 36 PERCENT OF APPLE'S LOST PROFITS; RIGHT?

A: I DON'T KNOW THE PERCENTAGE, BUT I'D HAVE TO CALCULATE IT.

Q: WELL, DO YOU RECALL THAT THIS WAS ONE OF THE PHONES THAT WAS A BIG PERCENTAGE OF YOUR LOST PROFITS? RIGHT?

A: IT LOOKS -- NOW THAT I HAVE THE NUMBER IN FRONT OF ME, WHAT WAS YOUR REFERENCE?

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Q: THIS IS ABOUT 36 PERCENT OF THE LOST PROFITS CALCULATION?

A: THAT'S -- YES. I THINK THAT'S CLOSE, YES. I'LL AGREE WITH THAT.

Q: AND SO THIS PHONE, YOU KNOW, THAT ON THE FRONT HAS -- THIS ISN'T A VERY CLEAR PICTURE. ON THE BOTTOM IT HAS THOSE SOFT TOUCH BUTTONS. DO YOU SEE THAT?

A: I SEE THAT, YES.

Q: AND IT HAS KIND OF WHAT LOOK LIKE SILVER ON THE SIDE, BUT IT'S CURVED BLACK ON THE TOP AND BOTTOM. DO YOU SEE THAT?

A: YES, I DO.

Q: OF COURSE IT HAS SAMSUNG'S NAME ON IT. IF YOU TURN IT OVER, IT LOOKS LIKE THIS IS A CAP ALMOST ON THE BACK, RIGHT, WHERE YOU CAN FEEL THE SURFACE GO FROM, YOU KNOW, THESE BLACK PARTS AT THE TOP TO THIS DIFFERENT MATERIAL HERE; CORRECT? A IGUESSSO. ITISWHATITIS. HEREITIS. Q OKAY.

A: THAT'S THE BACK OF IT.

Q: OKAY. AND YOU CAN SEE --
MAY I APPROACH?

A: SURE.

Q: SORRY. WHAT I'M SAYING IS THAT'S NOT A

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CONTINUOUS PIECE THERE? IT'S KIND OF BROKEN UP? YOU'VE GOT THIS PIECE AROUND HERE AND THEN KIND OF SEEMS TO HOLD IN THIS DIFFERENT TYPE BACK; RIGHT?

A: WELL, I'M NOT AN ENGINEER, BUT IT WOULD APPEAR TO BE A DIFFERENT PIECE, YES.

MR. PRICE: AND YOUR HONOR, IF I COULD JUST GIVE THAT TO THE JURY?

THE COURT: PLEASE, GO AHEAD.

BY MR. PRICE:

Q: BUT -- SO INSTEAD OF USING THIS PHONE, WHICH WAS -- WHICH ACCOUNTS FOR ABOUT 36 PERCENT OF YOUR LOST PROFITS FIGURE WHICH HAS THE DIFFERENT TEXTURE AND ALL THAT, INSTEAD OF USING THAT PHONE, YOU DECIDED, AS AN OBJECTIVE, NEUTRAL EXPERT, TO USE THE FIGURE IN 34B.4. WE CAN PUT THAT BACK.
IS THAT RIGHT?

A: YES.

Q: WAS THAT YOUR DECISION? OR WAS THAT THE ATTORNEYS' DECISION?

A: NO. THAT WAS MY DECISION.

Q: ANOTHER PHONE YOU COULD HAVE USED -- WELL, THERE ARE A NUMBER YOU COULD HAVE USED BECAUSE THERE ARE A LOT OF PHONES; RIGHT?

YOU COULD HAVE USED THE
DROID 1025. IT'S ALREADY IN EVIDENCE. I THINK MS. KARE SAID THAT'S

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THE ONE WITH THE CHIN.

A: YES.

Q: AND YOU CAN SEE THE CHIN EVEN FROM WHERE YOU'RE SITTING; RIGHT?

A: WELL, NO.

Q: YOU CAN'T?

A: I DON'T DOUBT YOU.

Q: MS. KARE MUST HAVE BETTER EYES THAN YOU.

IF I CAN APPROACH, YOUR HONOR?

THE COURT: PLEASE, GO AHEAD.

BY MR. PRICE:

Q: IT'S NOT QUITE A JAY LENO CHIN, BUT YOU CAN SEE IT'S A DIFFERENT SHAPE?

A: YES, I SEE THAT.

MR. PRICE: IF I MAY HAND THIS OUT, YOUR HONOR?

THE COURT: PLEASE, GO AHEAD.

BY MR. PRICE: AND THIS PHONE ACCOUNTS FOR ABOUT $126 MILLION
OF SAMSUNG'S PROFITS THAT YOU'RE SAYING THAT SAMSUNG SHOULD GIVE TO APPLE?

A: WHICH ONE WAS THAT?

Q: THAT'S THE DROID.

A: DID YOU SAY 106 MILLION?

Q: I THINK I HAVE DOWN HERE 126 MILLION.

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A: I'VE GOT 106 MILLION, SO --

Q: OKAY. GIVE OR TAKE 20 MILLION.

A: RIGHT.

Q: I'LL HAVE SOMEONE CHECK THAT AND SEE IF THERE'S A REASON WHY WE HAVE DIFFERENT NUMBERS.

A: WELL, HERE, I SEE THE 126 MILLION. YOU'RE ON THE OPTION IF IT'S ONLY INFRINGER'S PROFITS. I WAS LOOKING AT THE CALCULATION WHEN IT WAS LOST PROFITS, INFRINGER'S PROFITS, PLUS REASONABLE ROYALTY. SO THIS IS A CASE WHERE BOTH OF OUR NUMBERS ARE RIGHT DEPENDING ON WHICH OPTION.

Q: GREAT. I LIKE BEING RIGHT.

NOW, IF WE CAN GO TO -- ANOTHER ONE YOU SHOWED WAS YOU SHOWED SAMSUNG'S SMARTPHONE MARKET SHARE, AND THAT WAS 34B.9, AND YOU SAID THIS WAS A RATHER DRAMATIC UPTAKE IN SAMSUNG'S MARKET SHARE.
DO YOU REMEMBER THAT?

A: I DO.

Q: AND AGAIN, YOU PUT THIS PHONE UP HERE. THERE ARE A COUPLE PHONES THAT CAME OUT AROUND THAT TIME; CORRECT?

A: YES, THAT'S RIGHT.

Q: INCLUDING THE CAPTIVATE, WHICH THE JURY IS LOOKING AT; RIGHT?

A: I DON'T REMEMBER WHEN THE CAPTIVATE CAME OUT,

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BUT I DO KNOW THAT THERE WERE MORE THAN ONE PHONE THAT CAME OUT AROUND THAT TIME PERIOD.

Q: AND IT'S CORRECT THAT, BY THE WAY, THESE SALES REFLECT BOTH ACCUSED AND NON-ACCUSED PHONES THAT SAMSUNG SOLD?

A: THAT'S POSSIBLE. THAT IS POSSIBLE.

Q: IN FACT, IF YOU LOOK AT THE FOURTH QUARTER, FOR EXAMPLE, OF 2010, IT'S ONLY ABOUT 49 PERCENT OF THIS GROWTH THAT IS DUE TO THE ACCUSED PHONES?

A: RUN THAT BY ME AGAIN.

Q: SURE. BY THE FOURTH QUARTER OF 2010, FOR EXAMPLE, ONLY ABOUT -- ONLY, LIKE, 48 PERCENT OF THESE SALES ARE OF THE ACCUSED PHONES.

A: I -- I DON'T KNOW WHERE YOU'RE GETTING THAT NUMBER. I'M SORRY. I DON'T KNOW THAT TO BE THE CASE.

Q: OKAY. SO BASICALLY YOU CAN'T TELL THE JURY WHAT PERCENTAGE OF THIS IS ACCUSED PHONES, WHAT PERCENTAGE IS NON-ACCUSED PHONES?

A: WHAT PERCENTAGE OF THEIR MARKET SHARE, YOU'RE SAYING, I THINK IS YOUR QUESTION, AND THE ANSWER IS NO, I CAN'T AS I SIT HERE. I'D HAVE TO GO BACK AND CALCULATE TO SEE WHICH NON-ACCUSED SMARTPHONES, AS IDENTIFIED BY IDC, ARE IN THAT NUMBER.

Q: OKAY.

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A: YOU'RE THROWING OUT A NUMBER. I JUST DON'T KNOW.

Q: AND YOU'VE GOT A SCALE HERE OF 0 TO 25 PERCENT, DO YOU SEE THAT, 0 TO 25?

A: I DO SEE THAT, YES.

Q: AND THE SCALE KIND OF AFFECTS VISUALLY LOOK AT THIS; RIGHT?

A: WELL, THE -- THE PAPER DEFINES HOW BIG SCALE CAN BE. BUT, YES.

Q: SO THERE WAS ACTUALLY A CHART IN YOUR REPORT, YOUR SUPPLEMENTAL REPORT, OF THE SMARTPHONE MARKET SHARE; RIGHT?

Q: OKAY. AND SO YOU REFLECTED THAT PERCENT SCALE INSTEAD OF 100 PERCENT?

A: YES.

Q: AND WHAT WE HAVE HERE IN BLUE IS APPLE'S SHARE; CORRECT?
A: WELL, IT'S -- YES BUT THIS IS A
DIFFERENT TIME PERIOD. I THINK WE NEED TO BE CLEAR ON THAT. THIS STARTS IN 2010, AND REMEMBER THE OTHER CHART STARTED IN 2007.

Q: RIGHT. I'M LOOKING AT THE PART THAT STARTS AFTER YOU SAY SAMSUNG WAS IN COMPETITION.

A: AGREED, AGREED.

Q: OKAY. AND SO IF WE LOOK AT, AT--THEN IF WE LOOK AT APPLE'S SHARE, YOU SEE IT'S KIND OF -- I MEAN, THEY'RE -- BY THE FOURTH QUARTER OF 2011, THEY'RE CLOSE TO HALF OF ALL -- THEY HAVE ALMOST HALF THE MARKET.

I'M. SORRY. APPLE HAS ABOUT HALF OF THE MARKET AS OF THE FOURTH QUARTER OF 2011; RIGHT?

A: YES.

Q: AND YOU CAN SEE BASICALLY, IF WE THEN LOOK AT

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UNITS SHIPPED -- BY THE WAY, NOW, ARE THESE UNITS SHIPPED IN TERMS OF JUST MARKET SHARE AGAIN? OR IS THAT LOOKING AT THIS SIDE HERE?

A: NO. I THINK THAT'S LOOKING AT THE RIGHT-HAND AXIS, YES.

Q: OKAY. AND YOU CAN SEE THE UNITS SHIPPED FOR APPLE HAS REALLY EXPLODED; CORRECT?

A: YES.

Q: IN FACT, YOU KNOW THAT -- OR LOOKING AT THE DOCUMENTS, THAT APPLE IS THE MOST PROFITABLE COMPANY IN THE WORLD?

A: MOST PROFITABLE?

Q: YEAH, MOST PROFITABLE.

A: MOST VALUABLE. I DON'T KNOW THAT IT'S THE MOST PROFITABLE BECAUSE THAT TAKES IN A LOT OF COMPANIES. I MEAN, YOU CAN HAVE SOME SMALL COMPANIES THAT ARE, THAT ARE BASICALLY PRINTING MONEY.

SO I DON'T KNOW THAT THEY WOULD BE VIEWED AS THE MOST PROFITABLE. BUT THEY ARE CERTAINLY VERY SUCCESSFUL AND VERY VALUABLE.

Q: AND BY THE WAY, YOU HAD TALKED TO THE JURY ABOUT HOW THE MONEY GOES WHEN SAMSUNG SELLS PHONES, THAT SEC MANUFACTURES THE PHONES AND THEN THEY'RE SOLD TO A SUBSIDIARY WHO THEN SELLS TO CARRIERS.

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DO YOU REMEMBER THAT?

A: I DO, YES.

Q: AND THEN A LOT OF THAT MONEY GOES BACK TO KOREA; CORRECT?

A: 97 TO 98 PERCENT OF IT GOES BACK, YES.

Q: AND YOU ALSO LOOKED AT U.S. COMPANIES THAT SELL THINGS MANUFACTURED HERE, MAYBE AIRPLANES OR STEEL OR WHATEVER, THAT ARE SOLD TO FOREIGN COUNTRIES; RIGHT?

A: YES.

Q: AND MOST OF THAT COMES BACK HERE BECAUSE OUR COMPANIES SOLD IT; RIGHT?

A: OUR COMPANIES ARE --

Q: IN THE U.S., LIKE THE STEEL COMPANIES?

A: DEPENDS ON THE ARRANGEMENT. DEPENDS ON WHETHER THEY'RE SELLING TO AN INDEPENDENT PARTY. IT'LL DEPEND ON THE FACTS.
COULD THEY BE EXACTLY REVERSED? SURE, THEY COULD BE.

Q: OKAY. AND THERE'S -- AND YOU WERE SAYING THERE'S NOTHING INAPPROPRIATE ABOUT THAT; CORRECT?

A: NO, THERE'S NOTHING INAPPROPRIATE ABOUT IT, NO. OTHER THAN -- UNLESS YOU TRY IT AND DIVIDE IT UP AND SAY, "WELL, NOW I ONLY WANT TO LOOK AT A PIECE OF IT." THAT'S INAPPROPRIATE.

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BUT AS LONG AS YOU CONSOLIDATE THEM ALL, I DON'T HAVE A PROBLEM WITH THAT.

Q: FROM AN ANALYTICAL PERSPECTIVE, YOU WANT TO LOOK AT THE WHOLE THING IS WHAT YOU SAID?

A: NOT ANALYTICAL. IF I WANT TO KNOW THE VALUE OR WHAT BENEFITS SAMSUNG GAINED, YOU HAVE TO LOOK AT THE CONSOLIDATED. THAT'S MY ONLY POINT. YOU CAN'T DIVIDE IT UP AND LOOK AT A PIECE OF IT, PARTICULARLY WHEN YOU HAVE CASH OR MONEY THAT'S MOVING IN SUCH A DRAMATIC FASHION UNDER THE CONTROL OF SEC.

Q: OKAY. SO LET'S GO BACK TO YOUR CHART THEN, IF WE CAN.
IS IT YOUR UNDERSTANDING THAT APPLE -- BY THE WAY, APPLE COMES OUT, BASICALLY, WITH A NEW PHONE ONCE EVERY COUPLE OF YEARS?

A: MIGHT BE A LITTLE BIT MORE FREQUENTLY THAN THAT, BUT SOMETHING IN BETWEEN A YEAR AND TWO YEARS I'D SAY.

Q: AND WHAT YOU'VE NOTICED IS THAT -- WHEN YOU LOOK AT THE CHARTS IS THAT APPLE'S SALES DRAMATICALLY SPIKE WHEN IT COMES OUT WITH A NEW PHONE; CORRECT?

A: THAT'S CORRECT.

Q: BECAUSE ITS CUSTOMERS HAVEN'T -- THEY HAVE THE

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OLD MODEL AND THEY WANT A NEW, PRETTIER ADVANCED ONE; RIGHT?

A: THEY WAIT. THAT'S CONSTANTLY -- CUSTOMERS WILL WAIT BECAUSE THEY WANT -- THEY FIGURE, "IT'S COMING OUT. I'LL WAIT AND GET IT WHEN IT COMES OUT."

Q: WHEREAS SAMSUNG COMES OUT WITH LOTS OF PHONES PER YEAR?

A: CERTAINLY MORE THAN APPLE, YES, THAT'S TRUE.

Q: AND THE SPIKE IN -- WE'VE GOT, LIKE, IN 2011, YOU'VE GOT SAMSUNG GOING UP -- AT THIS POINT WE'RE TALKING ABOUT PHONES LIKE THE GALAXY S II; CORRECT?

A: I THINK THAT'S RIGHT. AGAIN, I DON'T HAVE COMMITTED TO MEMORY THE LAUNCH DATES OF EACH OF THE PHONES. THAT IS AN ACCUSED PHONE, AND I THINK IT IS IN THE 2011 TIME PERIOD.

Q: OKAY. SO IF YOU WANT TO SEE, YOU KNOW, WHAT SAMSUNG IS ACTUALLY SELLING, HOW IT'S CREATING THIS, THIS, THESE SALES, YOU'D WANT TO LOOK AT KIND OF WHAT PHONES ARE ACTUALLY DRIVING THIS; RIGHT?

A: I DON'T UNDERSTAND THE QUESTION. I'M SORRY.

Q: WELL, I MEAN, YOU'D WANT TO SEE, IN 2010 OR 2011 HERE, WHAT'S THE PHONE MIX THAT SAMSUNG HAS, BECAUSE IT DOESN'T JUST HAVE ONE PHONE; RIGHT?

A: RIGHT. BUT THE PURPOSE -- I'M NOT DISAGREEING

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WITH THAT. I'M JUST SAYING I DON'T UNDERSTAND THE QUESTION.
THE PURPOSE OF THIS IS TO SHOW THE SMARTPHONE MARKET SHARE. IF YOU WANT TO KNOW HOW A PARTICULAR PHONE IS DOING, YOU SHOULD LOOK TO THAT PHONE AND BREAK IT DOWN.

Q: WELL, IF YOU WANT TO LOOK TO SEE WHETHER OR NOT IT'S BECAUSE SAMSUNG DID SOMETHING WRONG, THAT IS, WHETHER OR NOT A PARTICULAR PHONE WAS, WAS SOMETHING THAT WAS DRIVING INJURY TO APPLE, YOU'D HAVE TO LOOK AT THE PARTICULAR PHONE, LIKE THE
DROID, AND MAKE A DECISION AS TO WHETHER OR INFRINGED; RIGHT?

A: YES. AGREED.

Q: NOW, LET ME ASK YOU A LITTLE BIT ABOUT ASSUMPTIONS HERE.

AND I WANT TO START OUT WITH WHAT TOLD THE JURY AT THE END, THAT DAMAGES WERE SOMEWHERE BETWEEN 2.5 AND 2.75 BILLION.

A: THAT'S CORRECT.

Q: OKAY. SO LET ME UNDERSTAND THIS. IF THE JURORS LOOK AT THIS EVIDENCE -- AND LET ME GIVE YOU A HYPOTHETICAL -- THEY SAY, "WELL, YOU KNOW, THE DESIGN PATENTS, THE TRADEMARK, I DON'T THINK THEY INFRINGE THAT. I DON'T THINK THERE'S, YOU KNOW,

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DECEPTION OR THAT PEOPLE WOULD BE CONFUSED. AND I'M LOOKING AT THESE, THESE UTILITY PATENTS AND I'M GOING TO CONCLUDE, YOU KNOW, THEY DO THE BOUNCE BACK THING, THEY DO THAT, AND I'M GOING TO FIND THAT'S A VALID PATENT."
ARE YOU WITH ME SO FAR?

MS. KREVANS: OBJECTION, YOUR HONOR. THERE ARE NO TRADEMARKS AT ISSUE IN THIS CASE.

MR. PRICE: I'M SORRY. TRADE DRESS. I MISSPOKE. I APOLOGIZE.

Q: SO IF YOU SUBSTITUTE "TRADE DRESS" AND THE "TRADEMARK," ARE YOU WITH ME SO FAR?

A: I'M ALL RIGHT. KEEP GOING. SURE.

Q: OKAY. SO THE JURORS FIND, AFTER ANALYZING THIS THAT, WELL, YOU KNOW, SAMSUNG SHOULDN'T HAVE USED THE BOUNCE BACK AND THAT'S VALID. LET'S ASSUME THAT'S WHAT THEY FIND, OKAY?
YOUR DAMAGES FOR THAT IS GOING TO BE A LOT LESS THAN $2.5 BILLION WHICH YOU SAID WAS THE SMALLEST NUMBER OF DAMAGES THAT SHOULD BE AWARDED; RIGHT?

A: WELL, I DON'T KNOW THAT IT'S GOING TO BE A LOT LESS, NO.

Q: SO YOU'RE SAYING THAT IF THE ONLY INFRINGEMENT THAT EXISTS OF A VALID PATENT IS THE BOUNCE BACK,

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OKAY -- YOU KNOW WHICH ONE THAT IS; RIGHT?

A: SO -- YES. MAYBE I MISUNDERSTOOD YOUR QUESTION. SO YOUR HYPOTHETICAL IS ONLY THAT?

Q: ABSOLUTELY.

A: YES.

Q: YOU UNDERSTAND THE JURORS, YOU KNOW, MIGHT DECIDE THAT APPLE'S WRONG ON SOME OF THESE THINGS?

A: THEY COULD DECIDE THAT.

Q: "AND SO INSTEAD OF THROWING A COUPLE BILLION THEIR WAY, I'M GOING TO LOOK AT IT ANALYTICALLY AND DECIDE, YOU KNOW, WHAT DID -- WHAT DID SAMSUNG ACTUALLY DO WRONG, IF ANYTHING?"

YOU UNDERSTAND THEY MIGHT TAKE THAT
APPROACH?

A: I DO.

Q: OKAY. AND IF THEY TAKE THAT APPROACH, I WANT YOU TO ASSUME THAT THEY DECIDE, NO DESIGN PATENT INFRINGEMENT OR THE DESIGN PATENTS AREN'T VALID OR NO TRADE DRESS INFRINGEMENT BECAUSE, YOU KNOW, AN ORDINARY OBSERVER IS NOT GOING TO BE CONFUSED AND THERE'S NO DECEPTION, NO DECEIT.

BUT THEY DO LOOK AT THE UTILITIES AND SAY, "YOU KNOW, THAT BOUNCE BACK, I THINK APPLE OWNED THAT AND THEY HAD A VALID OWNERSHIP RIGHT TO THAT AND SAMSUNG USES THAT."

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OKAY? SO UNDER THAT ASSUMPTION, ARE YOU
ME?

A: I'M WITH YOU.

Q: OKAY. YOUR DAMAGES AREN'T CLOSE TO 2 BILLION BILLION OR ANYTHING LIKE THAT, ARE THEY?

A: AGREED.

Q: NOW, HOW CAN THEY TELL? HOW CAN THE JURORS
TELL THAT IF IT'S JUST -- ASSUME IT's JUST A BOUNCE BACK. YOU HAVEN'T GIVEN THEM THE TOOLS TO BE ABLE TO COME UP WITH A DAMAGES FIGURE FOR THAT?

A: I HAVE.

Q: AND YOU SAY THAT'S IN HERE?

A: YES, IT IS.

Q YOU CAN GO IN AND LOOK AT IT AND POINT TO IT? I'M SORRY. BUT WE'LL GET BACK TO THAT.

BUT RIGHT NOW WHAT YOU'RE SAYING IS WHAT YOU SAID EARLIER, WHICH IS THE MINIMUM DAMAGES FIGURE, WHICH IS $2.4 BILLION -- I SHOULD HAVE WRITTEN IT DOWN -- 2.5 BILLION?

A: THAT'S CORRECT>

Q: THAT'S ABSOLUTELY INCORRECT; RIGHT? THAT'S ABSOLUTELY INCORRECT? THAT IS NOT THE MINIMUM DAMAGES FIGURE THAT THIS JURY COULD AWARD IF IT FOUND SOME INFRINGEMENT?

A: NO, I DISAGREE.

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Q: OKAY. SO DO YOU AGREE, THEN, THAT IF THIS JURY FOUND THAT THE ONLY THING WRONG WAS THAT SAMSUNG USED A BOUNCE BACK, YOU'RE SAYING THAT THAT DAMAGE WOULD BE 2.5 BILLION?

WHEN I STARTED MY PRESENTATION, I SAID THAT I ASSUMED THAT ALL PATENTS ARE VALID AND THAT ALL PRODUCTS INFRINGE, AND UNDER THAT ASSUMPTION, WHICH I'M GIVEN AS AN EXPERT, THE MINIMUM DAMAGES ARE $2.5 BILLION AND THEY'RE NOT LESS THAN THAT IN MY OPINION.

YOU HAVE A HYPOTHETICAL, AND I AGREED WITH YOU, ON THAT HYPOTHETICAL, THE DAMAGES WOULD BE LESS.

BUT THAT'S NOT MY OPINION.

Q: I WAS LOOKING AT THE TRANSCRIPT AND I WANTED TO MAKE SURE THAT WE ALL UNDERSTOOD. SO APPARENTLY WHEN YOU TOLD THE JURY THAT THE MINIMUM DAMAGES WERE 2.5 BILLION, THAT WAS ASSUMING THAT APPLE WAS CORRECT ON EVERY PATENT, THAT THERE WAS INFRINGEMENT ON EVERY PATENT AND THAT EVERY PATENT WAS VALID?

A: YES.

Q: OKAY. SO I'M JUST CURIOUS, WERE YOU ASKED BY,

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BY APPLE TO PRESENT TO THE JURY, FOR EXAMPLE, WHAT WOULD BE YOUR OPINION OF THE DAMAGES IF IT WAS JUST A BOUNCE BACK INFRINGEMENT?

A: NO.

Q: HOW ABOUT IF IT WAS -- I'M TRYING TO THINK OF THE PATENT NOW -- HIT TO ZOOM AND THEN HIT SOMEWHERE ELSE TO CENTER AND ZOOM?

A: NO.

Q: I'VE GOT THE LIST HERE. THERE'S THE ONE WHERE YOU, YOU USE ONE FINGER FOR SCROLLING AND THEN THERE'S A PARTICULAR METHOD BY WHICH YOU USE TWO FINGERS TO ZOOM.

A: YOU MAY BE MIXING THE THREE UTILITY PATENTS UP, BUT I'M FOLLOWING YOU, AND THE ANSWER IS STILL NO, I DIDN'T DO -- I WASN'T ASKED TO MAKE THAT CALCULATION.

Q: OKAY. AND THESE -- THE LOST PROFITS THAT -- THE LOST PROFITS IS A BIG PERCENTAGE OF YOUR NUMBERS; RIGHT?

PROFITS IF THERE'S -- IF THE PATENT THAT IS INFRINGED IS A UTILITY PATENT; RIGHT?

A: THAT'S RIGHT. THAT'S NOT ONE OF THE FORMS OF DAMAGES UNDER A UTILITY PATENT, I AGREE.

Q: SO THOSE BIG NUMBERS ALL HAVE SOMETHING TO DO WITH THE WAY THE PHONE OR THE TABLET LOOKS?

A: WELL, THE ONLY ADDITION, SO THE RECORD IS CLEAR, IS REMEMBER THE SLIDING PHONES. SO IF YOU MOVE THOSE PHONES OUT OF INFRINGER'S PROFITS, YOU'VE GOT TO PUT THEM INTO SOME COLUMN, LOST PROFITS OR REASONABLE ROYALTY.

AND SO AT A MINIMUM, YOU WOULD MOVE THEM ALL DOWN TO REASONABLE ROYALTY TO THE EXTENT THAT THEY ALSO INFRINGED THE UTILITY PATENT.

Q: AND SO THAT'S, THAT'S WHAT I'M SAYING. IT'S ONLY -- YOU GET INFRINGER'S PROFITS ONLY IF THERE'S SOME FINDING ABOUT BASICALLY HOW THESE PHONES LOOK?

A: I'M AGREEING WITH YOU. BUT ALL I'M SAYING IS IT'S NOT LIKE YOU SUBTRACT IT. YOU HAVE TO SUBTRACT IT, BUT YET ADD IT BACK ON THE OTHER FORM.

Q: WELL, YOU DON'T ADD IT BACK IF THERE'S A FINDING THAT, YOU KNOW, AN ORDINARY OBSERVER, FOR

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EXAMPLE, IS NOT GOING TO BE CONFUSED OR THERE'S NOT DECEIT OR THAT THE PATENT'S INVALID; RIGHT?

A: NO, YOU DO. THAT'S WHAT'S KEY, BECAUSE THE KEY TO THE CALCULATION IS EVERY PRODUCT -- THE CALCULATION IS DONE ON AN INDIVIDUAL PRODUCT. SO IN YOUR HYPOTHETICAL, WE HAVE JUST A PHONE, AND THAT PHONE INFRINGES THE UTILITY PATENTS AND IT INFRINGES THE TRADE DRESS AND IT INFRINGES THE DESIGN PATENTS.

I'M THINKING THAT YOUR HYPOTHETICAL -- AND ON THAT BASIS, THE CALCULATION WOULD BE PRESUMABLY BASED ON THE INFRINGER'S PROFITS.

YOU SAY LET'S ASSUME THAT THEY DON'T INFRINGE THE DESIGN PATENTS AND THE TRADE DRESS. LET'S TAKE THAT AWAY.

WELL, WE STILL HAVE THE POTENTIAL OF LOST PROFITS ON THE UTILITY AND, AT A MINIMUM, THE REASONABLE ROYALTY.

SO WHEN YOU TAKE AWAY THE INFRINGER'S PRODUCTS, YOU'VE TO RECALCULATE THE DAMAGES FOR THAT PARTICULAR PHONE ON ONE OF THOSE OTHER BASES THERE, ASSUMING IT INFRINGES ONE OF THE OTHER UTILITY PATENTS.

Q: AND THAT'S WHAT YOU'RE SAYING. ASSUMING THERE'S SOME OTHER INFRINGEMENT, THERE'S GOING TO

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BE SOME WAY TO CALCULATE IT?

A: YES.

Q: AND YOU'VE TOLD US THAT YOU WEREN'T ASKED TO CALCULATE ASSUMING THAT, YOU KNOW, ONE OF THESE PATENTS, UTILITY PATENTS WAS INFRINGED ONLY, OR, OR A COMBINATION OF THE UTILITY PATENTS.

A: THE COMBINATION -- THAT'S WHY A MODEL WAS REQUIRED -- IS ENDLESS. THERE ARE REALLY HUNDREDS OF THOUSANDS OF COMBINATIONS GIVEN THE NUMBER OF PATENTS, ET CETERA.

AND NO, I WASN'T. THE ANSWER IS NO, I
WASN'T.

Q: AND THE ONLY COMBINATIONS I'M TALKING ABOUT ARE THE THREE UTILITY PATENTS. OKAY?

A: YOU'RE RIGHT, I WAS NOT ASKED TO PRESENT THAT.

Q: SO THE ASSUMPTIONS, THEN, ARE WE TALKED ABOUT EACH PATENT, DESIGN PATENT IS VALID AND INFRINGED. THAT'S YOUR ASSUMPTION FOR YOUR DAMAGES; RIGHT?

A: YES.

Q: THAT ALL THE DIFFERENT PRODUCTS THAT APPLE SAYS INFRINGE DO INFRINGE; CORRECT?

A: YES.

Q: THAT EACH OF THE UTILITY PATENTS IS VALID AND WHATEVER APPLE SAYS INFRINGES INFRINGES; CORRECT?

A: UNTIL THE JURY SAYS IT, YES.

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Q: THAT ALL OF APPLE'S TRADE DRESS IS VALID AND EVERYTHING APPLE SAYS INFRINGES INFRINGES; CORRECT?

A: YES.

Q: AND IT'S GIVEN ALL THOSE ASSUMPTIONS THAT YOU THEN HAVE THIS RANGE OF 2.5 BILLION TO 2.7 BILLION?

A: THAT'S CORRECT.

Q: SO LET'S TALK ABOUT, FOR EXAMPLE, THE BOUNCE BACK. ON YOUR LOST PROFITS, I THINK YOU'RE UP AROUND, FOR TOTAL, YOU'RE UP AROUND 400 SOMETHING MILLION?

A: 488 MILLION.

Q: OKAY. AND THAT OBVIOUSLY ISN'T LOST -- WOULD NOT BE APPLE'S LOST PROFITS WITH RESPECT TO, SAY, A BOUNCE BACK PATENT?

A: NOT EXCLUSIVELY, NO. SAME QUESTION, SAME ANSWER.

Q: IN FACT, YOUR ANALYSIS ON THAT, WHEN YOU TALKED -- WHEN YOU THOUGHT IT WOULD TAKE -- IF SAMSUNG WERE TOLD "YOU CAN'T DO THAT ON YOUR PHONE," IT WOULD TAKE THEM A MONTH TO DESIGN AROUND THAT AND DO SOMETHING ELSE?

A: AS ONE OF THOSE LIMITING CONDITIONS THAT I TALKED ABOUT, YES, I LIMITED THE CALCULATION TO JUST ONE MONTH OF LOST PROFITS FOR THAT.

Q: SO LET'S TALK ABOUT YOUR ANALYSIS ON -- YOU

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SAID YOU DID ANALYSIS ON BUT-FOR; THAT IS, IF -- IF SAMSUNG DIDN'T HAVE A FEATURE, WHAT WOULD HAPPEN?

AND FOR BUT-FOR, FOR LOST PROFITS, FOR APPLE'S LOST PROFITS, OKAY, YOU'RE SAYING THAT IF THE JURY FOUND INFRINGEMENT ON A UTILITY PATENT, THEN YOU'VE GOT TO LOOK AT, OKAY, WHAT WOULD APPLE HAVE MADE IF SAMSUNG DIDN'T HAVE THAT FEATURE; RIGHT?

A: MADE? WHAT --

Q: WOULD HAVE MADE.

A: ALL RIGHT. I'LL SAY YES. I'M NOT SURE WHAT YOU MEAN, BUT I'LL SAY YES.

THEY'VE ALREADY MADE THEIR PRODUCTS. THE PRODUCTS ARE THE IPHONES IN YOUR HYPOTHETICAL, SO IT WOULD BE THE IPHONE. IT'S ALREADY MADE.

Q: OKAY. AND I DIDN'T MEAN MANUFACTURE, BUT THE PROFITS THEY WOULD HAVE EARNED?

A: OKAY. THAT'S WHERE I WAS NOT SURE.

Q: AND WHEN YOU'RE DOING THAT, YOU'VE GOT TO ASK YOURSELF, HERE'S A SAMSUNG CUSTOMER, THEY'VE GOT A PHONE, ONE OF THE ACCUSED PHONES, THAT HAS BOUNCE BACK. NOW, IF BOUNCE BACK ISN'T IN THERE, ARE THEY GOING TO LEAVE SAMSUNG TO GO TO APPLE BECAUSE OF THAT ONE FEATURE? THAT'S THE BUT-FOR ANALYSIS, ISN'T IT? THAT -- IS SOMEONE GOING TO SAY, "I

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BOUGHT THIS PHONE. I LIKED IT. WELL, DARN. IT DOESN'T HAVE BOUNCE BACK ANYMORE. I'M GOING TO GO BUY AN APPLE."

A: WELL, THAT'S KIND OF A STATEMENT, BUT I'LL RESPOND TO IT AS A QUESTION.

Q: TRUE.

A: MY CALCULATION IS THAT THEY WOULD GO TO THEM BECAUSE, REMEMBER, I'VE ONLY TAKEN THE SALE AWAY FOR THE MONTH IT WOULD TAKE FOR SAMSUNG TO BASICALLY REMOVE THE BOUNCE BACK. THEY'RE GOT TO -- THAT'S JUST A PHYSICAL FACT. SAMSUNG, WITH THE ASSUMPTION THAT THEY CAN'T USE IT, HAS TO TAKE IT OUT OF THEIR PHONE. THEY HAVE TO REDESIGN THE PHONE. THEY HAVE TO NEGOTIATE A DIFFERENT PRICE. THEY NEED TO PUT THE MANUFACTURING FACILITY IN PLACE. I'VE ALLOWED, FOR EVERYTHING TO HAPPEN, ONE MONTH AND ONLY ONE MONTH.

AND DURING THAT PERIOD OF TIME, YES, SOME PORTION OF THE MARKET WOULD CHOOSE AN IPHONE INSTEAD OF SAYING, "OH, WELL, I'M GOING TO WAIT OR DO SOMETHING ELSE."

Q: WELL, FOR ONE THING, YOU WOULDN'T HAVE TO START A MANUFACTURING FACILITY TO CHANGE THE BOUNCE BACK. THAT'S JUST A SOFTWARE UPGRADE, RIGHT? PLUG IT INTO YOUR COMPUTER AND IT WOULD BE CHANGED?

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A: FAIR ENOUGH, YES.

Q: OKAY. AND MY QUESTION IS DIFFERENT. WE KNOW SOMETHING ABOUT THE PEOPLE WHO PURCHASE THE SAMSUNG PHONES THAT WE DON'T KNOW ABOUT THE GENERAL PUBLIC, WHICH IS THAT THEY CHOSE A SAMSUNG PHONE; RIGHT?

A: YES.

Q: OKAY. SO IF THEY CHOSE A SAMSUNG PHONE, YOU MIGHT WANT TO LOOK AS TO WHY THEY CHOSE THAT PHONE; CORRECT?

A: I AGREE, AND I DID.

Q: AND IN CONNECTION WITH THAT, YOU'D WANT TO ASK, OR FIND OUT, "OKAY, MR. PURCHASER, IF YOU DIDN'T HAVE BOUNCE BACK, WOULD YOU NOT HAVE CHOSEN THAT PHONE AND GONE SOMEWHERE ELSE?" THAT'S WHAT THE BUT-FOR CAUSATION IS. IF NOT FOR WHAT SAMSUNG WAS DOING, IT WOULD HAVE GONE TO APPLE INSTEAD; RIGHT?

A: THAT'S CORRECT.

Q: AND THERE ARE HUNDREDS AND HUNDREDS OF FEATURES ON A SAMSUNG SMARTPHONE; RIGHT?

A: YES.

Q: APPLE HAS DONE RESEARCH, ITSELF, ON WHY THE PEOPLE WHO BUY SAMSUNG, OR ANDROID, WHY ARE THEY ATTRACTED TO THAT PRODUCT INSTEAD OF OURS; RIGHT?

A: YES.

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Q: AND YOU REVIEWED SOME OF THAT?

A: I DID.

Q: SO, FOR EXAMPLE, IF YOU LOOK AT EXHIBIT 572 --

A: THESE ARE IN YOUR BOOKS, COUNSEL?

Q: YES. IF YOU NEED HELP FINDING IT, JUST LET ME KNOW.

A: 572. OKAY, I'M THERE.

Q: AND FIRST LET ME ASK YOU, IS THIS A DOCUMENT THAT YOU HAVE EVER SEEN?

A: I'VE SEEN A LOT OF APPLE SURVEYS, SO THAT'S PROBABLY -- TO MOVE IT ALONG, THAT'S PROBABLY ONE I'VE SEEN. I'VE SEEN A LOT OF THEM. IT LOOKS LIKE IT.

Q: SO APPLE LOOKS AT THE MARKET TO SEE WHY ARE PEOPLE CHOOSING OTHER PHONES? WHY ARE THEY CHOOSING OUR PHONE? THINGS LIKE THAT?

A: YES.

Q: AND THIS LOOKS LIKE AN APPLE DOCUMENT TO YOU?

A: YES.

MR. PRICE: YOUR HONOR, I MOVE EXHIBIT 572 INTO EVIDENCE.

THE COURT: IT'S ADMITTED.

MS. KREVANS: YOUR HONOR, I WOULD REQUEST THAT THIS DOCUMENT, BECAUSE IT'S A VERY SENSITIVE DOCUMENT, THAT WHAT'S ADMITTED BE ONLY THE PAGES

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THAT ARE SHOWN. THERE'S NO REASON TO ADMIT PAGES THAT ARE NOT SHOWN.

MR. PRICE: I HAVE NO PROBLEM WITH THAT.

(WHEREUPON, DEFENDANT'S EXHIBIT NUMBER 572.003, HAVING BEEN PREVIOUSLY MARKED FOR IDENTIFICATION, WAS ADMITTED INTO EVIDENCE.)

BY MR. PRICE:

Q: SO IF WE CAN LOOK AT 572.003, THAT'S A SMARTPHONE MARKET STUDY. DO YOU SEE THAT?

A: WHAT'S THE BATES PAGE?

Q: IT'S 572.003.

A: OH, THERE'S TWO DIFFERENT BATES RANGES HERE. SORRY.

Q: IT'S AT THE TOP WHERE IT SAYS DEFENDANT'S EXHIBIT NUMBER 572.003.

A: YES, I'M THERE.

Q: AND IF YOU LOOK AT THE SECOND PAGE, YOU SEE IT SAYS "WHY THIS REPORT," AND IT TALKS ABOUT -- I'M SORRY -- THAT'S 572.004, AND YOU SEE IT TALKS ABOUT "FOCUS ON IPHONE AND ANDROID."
AND YOU UNDERSTAND WHAT ANDROID IS?

A: I DO.

Q: THAT'S A DIFFERENT OPERATING SYSTEM WHICH IS OFFERED ON SAMSUNG AND OTHER PRODUCTS COMPARED TO

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APPLE'S OPERATING SYSTEM; CORRECT?

A: NOT ALL SAMSUNG PRODUCTS, BUT SOME SAMSUNG PRODUCTS. SORRY, SOME SAMSUNG PRODUCTS.

Q: LET'S GO TO THE KEY AREAS WHERE YOU HAVE, YOU KNOW, SMARTPHONE PURCHASE DRIVERS, BRAND LOYALTY, DRIVERS OF ANDROID CONSIDERATION AND PURCHASE.
DO YOU SEE THAT?

A: YES.

Q: OKAY. AND IF WE LOOK AT 572.08 -- I'M SORRY -- 077, YOU SEE THIS IS A SECTION THAT STARTS "DRIVERS OF ANDROID CONSIDERATION AND PURCHASE." DO YOU SEE THAT?

A: LET ME CATCH UP.

Q: IT'S AT THE TOP AGAIN, 572.077?

A: I GOT IT. I'M THERE.

Q: AND IF WE GO TO PAGE 572.082.

A: YES.

Q: AND THESE ARE THE TOP REASONS FOR BUYING AN ANDROID AMONG THOSE WHO CONSIDERED THE IPHONE. DO YOU SEE THAT?

A: I CAN'T READ THE FINE PRINT THERE, BUT, YES, IT DOES SAY THAT.

Q: IT MIGHT BE EASIER IF YOU LOOK AT IT BLOWN UP, BECAUSE, YEAH, THE WAY IT WAS --

A: I'M TRYING TO SEE WHAT THE LIGHT PRINT SAYS

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DOWN IN THE LOWER LEFT-HAND CORNER.

Q: "NOTE 25 PERCENT OF RECENT ANDROID BUYERS CONSIDERED AN IPHONE."

AND THIS IS, "FOR WHAT REASON DID YOU DECIDE TO BUY AN ANDROID-BASED SMARTPHONE RATHER THAN AN IPHONE?"

A: OKAY.

Q: AND IT'S GOT YOU WANT TO STAY WITH THE SERVICE PROVIDER; RIGHT?

A: YES.

Q: AND THAT'S BECAUSE DURING THE ENTIRE TIME PERIOD HERE, BY THE WAY, ONLY AT&T SOLD IPHONES DURING THE DAMAGES PERIOD?

A: LET ME UNDERSTAND THIS SLIDE. SO THIS SLIDE REPRESENTS ONLY THOSE PORTIONS WHO -- ONLY THOSE CUSTOMERS WHO HAVE ALREADY DECIDED TO STAY WITH ANDROID, NOT FOR OTHERS?

Q: THESE ARE PEOPLE WHO CHOSE ANDROID RATHER THAN CHOOSING AN IPHONE. THAT IS, WHY DID THEY CHOOSE --

A: YES, OKAY. I'M WITH YOU.

Q: OKAY. AND WE'VE GOT STAY WITH WIRELESS SERVICE PROVIDER, AND I WAS ASKING YOU ABOUT AT&T.
DURING THE DAMAGES PERIOD YOU CALCULATED --

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A: YES.

Q: -- THE ONLY PLACE YOU COULD BUY AN IPHONE WAS AT&T?

A: NO, THAT'S INCORRECT.

Q: AT WHAT POINT DID -- WAS THERE A PERIOD OF TIME WHEN YOU COULD ONLY GET IT THROUGH AT&T?

A: THERE WAS A PERIOD OF TIME, NOT THE WHOLE DAMAGE PERIOD OF TIME, BUT THERE WAS A PERIOD OF TIME THAT YOU COULD ONLY GET AN IPHONE AT AT&T.

BUT AS THE DAMAGE PERIOD PROGRESSED, OTHER CARRIERS DID CARRY THE IPHONE AS WELL.

Q: WHAT TIME PERIOD WAS IT WHERE YOU'VE GOT TO GO TO AT&T?

A: FROM THE START OF IT, I CAN'T REMEMBER THE
EXACT CUT OFF, BUT I KNOW ANOTHER CARRIER CAME IN.

THROUGHOUT THE ENTIRE TIME PERIOD AT&T, BUT THERE WAS A LIMITED TIME THERE EARLY
ON.

Q:
AND YOU SEE TRUSTED MODEL BRAND, PREFERRED LARGE SCREEN; RIGHT?

A: YES.

Q: PREFERRED THE ANDROID MARKET FOR APPS, THAT WAS ANOTHER REASON?

A: YES.

Q: AND IT GOES ON -- TURN-BY-TURN GPS NAVIGATION.

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THERE WAS A PERIOD OF TIME WHEN ANDROID HAD THAT AND APPLE DID NOT; CORRECT?

A: YES, MY UNDERSTANDING, YES.

Q: AND THIS KIND OF RUNS INTO THE NEWEST, COOLEST THING, WANTED THE LATEST TECHNOLOGY; RIGHT?

A: THAT'S WHAT IT SAYS, YES.

Q: AND ANOTHER REASON PEOPLE MIGHT CHOOSE PHONES IS PRICE; RIGHT? HOW MUCH THEY COST?

A: AGREED.

Q: AND YOU ACTUALLY DID A CALCULATION -- BY THE WAY, NOTHING IN HERE MENTIONS -- LET ME WITHDRAW THAT.

LET'S GO BACK TO PRICE. SORRY ABOUT
THAT.

A: THAT'S ALL RIGHT.

Q: MENTAL HICCOUGH.

YOU DID A CALCULATION WHICH COMPARED THE AVERAGE IPHONE PRICE TO THE AVERAGE IPHONE PRICE; RIGHT?

A: I KNOW THAT THERE'S A DIFFERENCE, YES. I MEAN, THERE'S MANY, MANY CALCULATIONS, BUT IT DEPENDS AT WHAT POINT IN TIME, WHICH PHONES, ET CETERA. BUT, YES, I'M AWARE THAT THERE'S A DIFFERENCE.

A: NO. I DIDN'T NEED TO KNOW WHAT SAMSUNG WAS SELLING FOR TO GET TO APPLE'S PROFITS PER SE. I NEEDED APPLE'S PROFITS ON THAT CALCULATION.

Q: LET'S SEE IF WE CAN -- CAN WE PUT UP 3909.046.

DO YOU REMEMBER IN YOUR REPORT, YOUR SUPPLEMENTAL REPORT, YOU CALCULATED THE AVERAGE IPHONE SELLING PRICE AT $656; RIGHT?

A: THAT LOOKS RIGHT, YES.

Q: AND YOU CALCULATED THE AVERAGE -- IF WE CAN GO TO THE NEXT --

A: BEFORE YOU LEAVE -- WELL, YOU'RE STILL UP THERE. THIS WAS FOR A SPECIFIC POINT IN TIME.

Q: RIGHT. YOU HAD TO DO IT FOR EVERY -- YOU DID IT FOR EVERY QUARTER; RIGHT?

A: YES.

Q: AND IF YOU HAVE A PROBLEM WITH THE QUARTER I CHOSE, JUST LET ME KNOW.

AND SO THIS IS FIRST QUARTER OF 2011, THE AVERAGE SAMSUNG SELLING PRICE WAS $369 THAT YOU CALCULATED?

A: WELL, I CALCULATED -- THOSE ARE ON TWO DIFFERENT BASES. THAT'S -- I'M SORRY. APPLE'S PRICE IS THE SALE TO THE CARRIER, AND SAMSUNG'S

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PRICE IS A SALE TO THE CARRIER, BUT THE ULTIMATE CONSUMER, OF COURSE, PAYS A DIFFERENT PRICE SINCE THE CARRIER SUBSIDIZES. SO THE REAL PRICE IS NOT 656. IT'S SOMETHING DRAMATICALLY LESS THAT THE CUSTOMER PAYS ULTIMATELY SINCE THE CARRIERS HAVE SUBSIDIZED APPLE'S PRICE.

Q: WELL, AS AN ECONOMIST, YOU KNOW THAT THERE'S NO SUCH THING AS A FREE LUNCH; RIGHT?

A: NO FREE LUNCH, RIGHT.

Q: AND SO WHAT HAPPENS IS WHEN YOU BUY -- IF YOU WANTED TO BUY AN IPHONE FROM APPLE, FOR EXAMPLE, AS OF A COUPLE WEEKS AGO -- I KNOW THERE WERE SOME BIG REDUCTIONS LAST WEEK BECAUSE OF THE IPHONE BEING OUT THERE, THE 5 -- BUT AS OF LAST WEEK, LIKE THE CHEAPEST YOU COULD GET WAS OVER $300.

A: I MISSED THE LAST PART OF THAT.

Q: THE CHEAPEST YOU COULD GET WAS OVER $300 IF A CONSUMER WANTED TO BUY IT FROM APPLE; RIGHT?

A: I DON'T KNOW THAT TO BE A FACT, BECAUSE AS YOU SAY, IT DEPENDS ON THE SPEED OF PHONE, DEPENDS ON THE CAPACITY OF THE PHONE, DEPENDS ON YOUR CARRIER'S SUBSIDY, BECAUSE EVEN IF YOU WALK INTO AN APPLE RETAIL STORE, IF YOU'RE RE-UPPING, THE CARRIER WILL PAY THAT SUBSIDY TO APPLE, SO THAT REDUCES YOUR PRICE THAT YOU HAVE TO PAY. SO I

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THINK WE'D HAVE TO LOOK AT A LOT OF CONSIDERATIONS.

Q: YEAH, BUT YOU PAY. I MEAN, YOU HAVE TO DO A TWO YEAR CONTRACT AND YOU'RE -- YOU'VE GOT CERTAIN RIGHTS AND --

A: THAT'S TRUE FOR BOTH.

Q: SO WHAT I'M SAYING IS THAT ONE WAY OR ANOTHER, THE CARRIER GETS A PROFIT, EVEN IF IT SELLS THE PHONE TO THE CUSTOMER -- THE PHONE IS BASICALLY A DOWN PAYMENT PRICE FOR A TWO YEAR PERIOD TO PAY MONEY; RIGHT?

A: IF WE'RE TRYING TO MAKE -- I THINK WHAT YOU'RE TRYING TO DO IS MAKE A PRICE COMPARISON. YOU HAVE TO LOOK AT ULTIMATELY WHAT THE RETAIL CUSTOMER PAYS, AND YOU'RE ABSOLUTELY RIGHT. WHAT THE CARRIER IS DOING TO TRY AND MAKE ITS INCOME OFF THE SERVICE IS TO OFFER A PHONE THAT'S COMPETITIVE, AND IF THERE'S HIGH DEMAND FOR THE APPLE PHONE, IT'S GOING TO DISCOUNT THAT PHONE SO THAT YOU WILL BUY IT AND BUY THEIR SERVICE, AND THAT'S THE PRICE THAT WE SHOULD BE COMPARING, NOT THE PRICE THAT APPLE SELLS TO THE CARRIER. IT'S WHAT BOTH -- THE CARRIER SELLS BOTH OF THOSE PRODUCTS.

THE COURT: IT'S 12:02 AND MS. SHORTRIDGE HAS BEEN GOING ALMOST TWO YEARS SINCE WE TOOK OUR BREAK SO EARLY, SO I THINK WE SHOULD TAKE A BREAK.

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IT'S 12:02. WE ARE NOW GOING TO BREAK
FOR LUNCH.

AGAIN, PLEASE KEEP AN OPEN MIND, DON'T DISCUSS THE CASE WITH ANYONE AND DON'T READ ABOUT OR RESEARCH THE CASE. OKAY. THANK YOU.

IF YOU WOULD, PLEASE, GO AHEAD AND LEAVE YOUR JURY BOOKS IN THE JURY ROOM.

(WHEREUPON, THE FOLLOWING PROCEEDINGS WERE HELD OUT OF THE PRESENCE OF THE JURY:)

THE COURT: ALL RIGHT. THANK YOU ALL VERY MUCH. WE'LL SEE YOU 1:00 O'CLOCK.

MR. LEE: YOUR HONOR, JUST ONE THING. AS THE NEW EXHIBITS ARE COMING IN FOR TOMORROW, I THINK YOUR HONOR STILL HAS ON YOUR PLATE THE WILLIAMS --

THE COURT: I DO.

MR. LEE: OKAY.

THE COURT: I'LL TRY TO GET THAT OUT --
IT'LL DEFINITELY GO OUT TODAY.

MR. LEE: OKAY. THANK YOU.

THE COURT: THANK YOU.

(WHEREUPON, THE LUNCH RECESS WAS TAKEN.)

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AFTERNOON SESSION

(WHEREUPON, THE FOLLOWING PROCEEDINGS
WERE HELD OUT OF THE PRESENCE OF THE JURY:)

THE COURT: OKAY. THANK YOU. PLEASE
TAKE A SEAT.

(WHEREUPON, THE FOLLOWING PROCEEDINGS
WERE HELD
IN THE PRESENCE OF THE JURY:)

THE COURT: ALL RIGHT. PLEASE TAKE A SEAT.

THE TIME IS NOW 1:00 O'CLOCK. GO AHEAD, PLEASE.

MR. PRICE: THANK YOU.

Q: DR. MUSIKA, WE WERE TALKING ABOUT PRICES AND I WANT TO ASK YOU ABOUT SOMETHING YOU SAID IN YOUR DIRECT WHERE YOU SAID THAT YOU RELIED ON DR. HAUSER.

A: YES.

Q: DID YOU TALK TO HIM FOR MORE THAN ONE AND A HALF MINUTES?

A: YES.

Q: NOW, LET ME ASK YOU SOME SPECIFICS ABOUT YOUR, YOUR METHODOLOGY, AND I'M GOING TO STICK ON APPLE'S LOST PROFITS, OKAY?
AND IN PARTICULAR, I WANT TO ASK YOU ABOUT -- OH, ONE THING. YOU'RE NOT SEEKING ANY

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LOST PROFITS AT ALL FOR THE ICON, OR THE DESIGN PATENT D'305; CORRECT?

A: THAT'S THE SO-CALLED GUI PATENTS?

Q: SURE.

A: I'D HAVE TO LOOK, BUT THERE IS --

Q: THE ONE WITH THE ICONS.

A: YES, YES.

Q: OKAY.

A: YOU ARE CORRECT.

Q: AND SO LET'S LOOK AT -- WE SHOWED YOU THE CAPTIVATE THIS MORNING, WHICH IS EXHIBIT 1011. I DON'T KNOW IF IT'S MADE ITS WAY BACK IN FRONT OF YOU.

A: NO, IT'S NOT HERE.

Q: OH, IT'S RIGHT THERE.

YOUR HONOR, MAY I APPROACH?

THE COURT: YES, PLEASE.

BY MR. PRICE:

Q: SO I WANT TO TALK TO YOU ABOUT YOUR CALCULATION FOR LOST PROFITS OF THE CAPTIVATE.
YOUR RECORDS SHOW THIS WAS RELEASED IN JULY 2010; CORRECT?

A: I DON'T REMEMBER.

Q: WELL, LET ME ASK YOU TO ASSUME THAT, THAT THE RECORDS SHOW IT WAS RELEASED IN 2010.

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NOW, TO GET SALES, OBVIOUSLY APPLE HAD TO BE ABLE TO MAKE PRODUCT FOR SOMEONE WHO WAS GOING TO LEAVE SAMSUNG AND BUY AN IPHONE; RIGHT?

A: YES.

Q: OKAY. AND AS OF JULY 2010, THIS WAS ONE OF SAMSUNG'S, YOU KNOW, LATEST AND GREATEST NEW PHONES; RIGHT? WHATEVER DATE IT CAME OUT?

A: YES.

Q: OKAY. AND YOU -- AND BEFORE PREPARING YOUR SUPPLEMENTAL REPORT, YOU READ THE DEPOSITION TESTIMONY OF TONY BLEVINS; CORRECT?

A: I DID.

Q: MR. BLEVINS WAS PRESENTED AS A CORPORATE REPRESENTATIVE ON THE ISSUE OF APPLE'S CAPACITY AND ABILITY TO MANUFACTURE PHONES; CORRECT?

A: YES.

Q: AND MR. BLEVINS TESTIFIED THAT THERE WERE BACK ORDERS FOR THE IPHONE 4 FROM JUNE THROUGH SEPTEMBER 2010. DO YOU RECALL THAT?

A: YES.

Q: AND HE SAID THAT'S BECAUSE DEMAND EXCEEDED THEIR ABILITY TO PRODUCE THEM DURING JUNE THROUGH SEPTEMBER OF 2010; CORRECT?

A: YES.

Q: AND HE SPECIFICALLY SAID THAT IN ORDER TO TRY

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TO INCREASE THE SUPPLY, HE CONTACTED COMPONENT SUPPLIERS, TRIED TO EXPEDITE SHIPPING, AND THAT NONETHELESS, HE WASN'T ABLE TO PROVIDE THE SUPPLY BETWEEN JUNE AND SEPTEMBER OF 2010; CORRECT?

A: WELL, WHAT DO YOU MEAN BY -- WHEN YOU SAY HE WASN'T ABLE TO PROVIDE SUPPLY? THERE WERE --

Q: OF THE IPHONE 4.

A: THEY DID CERTAINLY PROVIDE SALES OF THE IPHONE 4. I DON'T REMEMBER EXACTLY WHEN IT WAS LAUNCHED.

ARE YOU SAYING THERE WAS A DATE AT WHICH THERE WERE NO IPHONE 4'S FOR SALE?

Q: LET ME ASK IT THIS WAY: DID MR. BLEVINS TESTIFY THAT APPLE DID EVERYTHING IT COULD TO INCREASE THE SUPPLY OF THE IPHONE 4 FROM JUNE OF 2010 UNTIL ABOUT SEPTEMBER OF 2010 SO THAT THEY COULD MEET DEMAND?

A: I DON'T REMEMBER HIS EXACT TESTIMONY, BUT SOMETHING TO THAT EFFECT, YES.

Q: AND FROM ABOUT JUNE OF 2010 TO SEPTEMBER OF 2010, APPLE DID NOT HAVE EXCESS SUPPLY OF THE APPLE IPHONE 4; CORRECT?

A: JUNE OF 2010 UNTIL WHEN?

Q: SEPTEMBER OF 2010.
ACTUALLY, LET ME REPHRASE THAT AND LOOK AT THE NEXT QUESTION.

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FROM JUNE 2010 UNTIL OCTOBER OF 2010, APPLE DID NOT HAVE EXCESS SUPPLY OF THE IPHONE 4; CORRECT?

A: I'M JUST LOOKING.

Q: IF YOU WANT TO LOOK AT HIS DEPOSITION TESTIMONY, IT'S IN THE GREEN BINDER DATED APRIL 3, 2012.

A: OKAY.

Q: THAT'S THE TESTIMONY COLLECTION HERE. IT SHOULD BE THE LAST TAB THERE, PAGE 17, LINES 1 THROUGH 7. DO YOU SEE THAT?

A: YES, I DO.

Q: SO BETWEEN JUNE OF 2010 THROUGH OCTOBER OF 2010, APPLE DID NOT HAVE EXCESS SUPPLY OF THE IPHONE; CORRECT?

A: THAT'S CORRECT.

Q: IPHONE 4?

A: THAT'S CORRECT.

Q: SO IF WE LOOK AT YOUR -- AT THE CALCULATION HERE, YOU CALCULATED THE PROFIT ON THIS PHONE -- IF WE CAN PUT UP DEMONSTRATIVE 3909.4 -- AND WE CAN GO THROUGH THIS TO 5, AND THEN -- WHAT NUMBERS ARE THESE? LET'S JUST KEEP GOING TO 49. GO ON TO 50 AND JUST DO THE SUMMARY. OKAY. RIGHT THERE.

SO IN YOUR REPORT, EXHIBIT 17.2-S, YOU'VE

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GOT SALES AND PROFITS FOR SALES FOR THE SAMSUNG GALAXY S CAPTIVATE TOTALING ABOUT $199 MILLION. DO YOU SEE THAT?

A: I DO.

Q: AND THAT'S WHAT APPLE WOULD, YOU BELIEVE, WOULD HAVE GOTTEN IN PROFITS BECAUSE IT WOULD HAVE SOLD MORE PHONES; CORRECT?

A: I DON'T REMEMBER THE EXACT NUMBERS, BUT I THINK THIS IS PROBABLY ACCURATE, YES.

Q: AND THIS IS A TIME WHEN APPLE COULDN'T EVEN SERVICE ITS OWN CUSTOMERS FOR THE IPHONE 4; CORRECT?

A: WELL, YES, WITH THE IPHONE 4. THEY HAD AVAILABLE IPHONES, BUT NOT THE IPHONE 4.

Q: SO APPLE COULDN'T SERVICE ITS OWN CUSTOMERS FOR THE IPHONE 4, BUT IT COULD SERVICE THE CUSTOMERS IT DIDN'T HAVE, THAT IT WOULD HAVE GOTTEN FROM SAMSUNG DURING THAT SAME TIMEFRAME?

A: IPHONE 3'S, 3G, NOT IPHONE.

Q: OH. SO NOW YOU'RE -- SO YOU'RE SAYING -- TO GET TO YOUR $199 MILLION FIGURE HERE, YOU'RE SAYING THAT CUSTOMERS WOULD HAVE GIVEN UP THEIR SAMSUNG, FOR EXAMPLE, BECAUSE IT DIDN'T HAVE A BOUNCE, AND GONE TO APPLE AND BOUGHT AN OLD MODEL THAT THE WORLD -- WHEN THE WORLD WAS WAITING FOR THE IPHONE

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4?

A: THERE'S A LOT IN THAT QUESTION. I DON'T THINK THE WHOLE WORLD WAS WAITING FOR IT. I BOUGHT AN IPHONE 4, FOR EXAMPLE, WHEN THE 4S CAME OUT BECAUSE IT WAS CHEAPER AND I'M A LITTLE CHEAP MAYBE. BUT I -- I WENT AHEAD AND BOUGHT IT.

SO THERE CERTAINLY ARE PEOPLE OUT THERE WHO BUY, AND APPLE CONTINUED TO SELL THE IPHONE 3 AND THE IPHONE 3G DURING THAT PERIOD OF TIME.

SO FACED WITH THAT OPTION, WOULD SOME PERCENTAGE OF THE CONSUMERS HAVE PURCHASED THE IPHONE 3 OR IPHONE 3G, PARTICULARLY SINCE IT WAS CHEAPER? YES, I THINK THEY WOULD HAVE.

Q: WELL, THIS PARTICULAR CONSUMER, YOU SAID, BOUGHT THE CAPTIVATE, WHICH WAS SAMSUNG LATEST AND GREATEST PHONE, THE NEXT NEW THING IN JULY THROUGH OCTOBER OF 2010, AND YOU'RE SAYING THAT, TO THE TUNE OF $199 MILLION, THEY WOULD HAVE GIVEN UP THAT PHONE BECAUSE IT LACKED BOUNCE BACK AND BOUGHT, NOT THE LATEST AND GREATEST, BUT A PHONE THAT WAS A YEAR OLD AT APPLE WHEN APPLE COULDN'T MAKE THE IPHONE 4, ANYMORE?

A: THAT'S SOMEWHAT OF A LARGE STATEMENT. I DIDN'T SAY EXCLUSIVELY BECAUSE OF THE BOUNCE.

Q: SO I WANT -- ANYWAY, THIS IS PART OF YOUR

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ANALYSIS. WE DIDN'T GO INTO MUCH DETAIL, BUT YOU DID SOME ANALYSIS ON CAPACITY; RIGHT?

A: IDID.

Q: AND YOU HAD TO RELY ON MR. BLEVINS' TESTIMONY, IN PART, BECAUSE OF THAT; CORRECT?

A: THAT'S CORRECT.

Q: AND MR. BLEVINS' TESTIMONY ABOUT THEIR CAPACITY; RIGHT?

A: YES.

Q: AND HIS ANALYSIS ASSUMED THAT A WORKER -- THAT ASSUMED 19 TO 20 HOUR WORKDAYS SIX DAYS A WEEK; RIGHT?

A: SAY THAT AGAIN. 19 --

Q: HIS ANALYSIS FOR CAPACITY, THAT IS, ENOUGH CAPACITY TO MAKE PHONES ASSUMED 19 TO 20 HOUR WORKDAYS SIX DAYS A WEEK?

A: NOT FOR THE SAME WORKER. THAT'S SHIFTS.

Q: THAT'S NOT THE SAME WORKER?

A: I DON'T THINK SO, NO.

Q: OKAY. LET ME ASK YOU, AGAIN, A LITTLE BIT, SINCE WE HAVEN'T GONE INTO MUCH DETAIL, I JUST WANT TO HIGHLIGHT A FEW DETAILS.
FOR THE IPAD, IN DOING LOST PROFITS, YOU DID A MARKET CALCULATION, AGAIN, TO TRY TO GIVE A NUMBER AS TO HOW MANY PEOPLE WOULD LEAVE THE TABLET

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AND GO TO THE IPAD; CORRECT?

A: YES.

Q: AND TO DO THAT, YOU HAD TO DO ANALYSIS AS TO WHO HAD MARKET SHARE IN THAT MARKET, THE SAME MARKET AS THE IPAD AND THE GALAXY --

A: YES.

Q: SO IF WE LOOK AT YOUR TESTIMONY AT 2582 OF YOUR REPORT -- I'M SORRY, IT'S EXHIBIT 2582. IT IS AT 19, PAGE 19 --

A: I'M SORRY. WHAT'S THE EXHIBIT NUMBER?

Q: IT'S 2582, THAT'S YOUR REPORT. AND IF YOU GO TO PAGE, I THINK IT'S 19, AND --

A: EXCUSE ME. WOULD THAT BE IN THE GREEN BINDER?

Q: NO, THAT'S THE NORMAL BLACK BINDER, I THINK. THAT'S DOCUMENTS.

DO YOU HAVE A COPY OF YOUR REPORT UP THERE WITH YOU? MAYBE YOUR COUNSEL MIGHT HAVE GIVEN YOU YOUR OWN COPY.

A: NO, I DON'T. I DON'T THINK IT'S IN HERE>

Q: IT IS THE BLUE BINDER I'M TOLD.

A: GREEN BINDER?

Q: BLUE.

A: BLUE?

Q: YES.

A: OKAY.
ALL RIGHT. HERE WE GO.

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Q: AND WHILE YOU'RE LOOKING, IF I CAN ASK THAT THIS BE BLOWN UP, LINES 6 THROUGH 9.

A: ALL RIGHT, I'M THERE.

Q: AND DO YOU SEE, BARNES & NOBLE SOLD THE NOOK COLOR AT THE TIME YOU DID YOUR ANALYSIS; CORRECT?

A: YES, FOR PART OF THE TIME. NOT THE WHOLE TIME. FOR PART OF THE TIME.

Q: AND, IN FACT, DURING PART OF THE TIME THEY HAD ABOUT 21 PERCENT OF THE MARKET, 21.9?

A: I DON'T REMEMBER EXACTLY WHAT THE MARKET SHARE WAS.

Q: AND HERE YOU SAY, "FURTHER, WHILE THE BARNES & NOBLE NOOK COLOR AND THE KINDLE FIRE HAVE CHANGED THE DYNAMICS OF THE MARKET, THESE PRODUCTS BY AND LARGE COMPETE IN A DIFFERENT SEGMENT OF THE TABLET MARKET THAN SAMSUNG AND APPLE. ACCORDINGLY, I HAVE REMOVED THEIR CORRESPONDING UNITS FROM MY ANALYSIS OF IDC'S MEDIA TABLET DATA."

DO YOU SEE THAT?

A: I DO.

Q: AND IDC, THAT'S THE SOURCE OF THE, OF A LOT OF THE INFORMATION YOU GAVE US ON MARKET SHARE AND THINGS LIKE THAT?

A: CORRECT.

Q: RIGHT? AND WAS THIS -- DID YOU ALSO TALK WITH

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MR. VAN LIERE AND MR. PORET?

A: I THINK I DID, BUT NOT ON THIS POINT, NO, NOT THAT I CAN RECALL.

Q: SO YOU DIDN'T TALK ABOUT WHETHER IT WAS APPROPRIATE -- WHETHER THE BARNES & NOBLE NOOK WAS EVEN IN THE SAME MARKET AS THE IPHONE, IPAD, OR THE GALAXY TAB? YOU DIDN'T HAVE ANY DISCUSSIONS ABOUT THAT?

A: NO. IDC DIDN'T INCLUDE IT FOR THE ENTIRE TIME AND CHANGED THEIR ANALYSIS MID-WAY THROUGH THE DAMAGES PERIOD AND PUT IT IN.

BUT THEY -- "THEY" BEING IDC -- DIDN'T HAVE THE E-READERS IN THE MARKET EARLIER. SO TO KEEP IT CONSISTENT, I TOOK THEM OUT OF A LATER PERIOD.

Q: BY THE WAY, TAKING THEM OUT OF THE PERIOD IN YOUR ANALYSIS WOULD INCREASE APPLE'S MARKET SHARE AND WOULD INCREASE THE DAMAGES NUMBERS?

A: SLIGHTLY, YES, VERY SLIGHTLY. BUT, YES, IT WOULD.

Q: SO LET ME ASK YOU NOW ABOUT, ABOUT SOME OF THE DOCUMENTS YOU WERE TALKING ABOUT. AND IN PARTICULAR, YOU WERE SHOWN EXHIBIT, I THINK IT'S 34, PX 34 --

I JUST WANTED TO GIVE EVERYONE NOTICE, OKAY? BECAUSE IT'S NOT GOING TO BE BRIEFED. I'VE SEEN ALL THE MOTIONS THAT WERE FILED OVER LUNCH, AND I AM NOT GOING TO TAKE ANY BRIEFS ON THAT.

GO AHEAD.

MR. PRICE: OKAY.

THE COURT: IT'S 1:14. GO AHEAD.

BY MR. PRICE:

Q: SO LET'S LOOK AT -- AND YOU SEE THIS DOCUMENT SAYS "FEASIBILITY REVIEW ON STANDALONE AP BUSINESS
FOR SMARTPHONE MARKET." DO YOU SEE THAT?

A: I DO.

Q: NOW, YOU KNOW THAT SAMSUNG MAKES A LOT OF THINGS, TV'S, OH, GOSH, A WHOLE LIST OF THINGS THAT YOU SEE SAMSUNG'S NAME ON; RIGHT?

A: ABSOLUTELY.

Q: AND THEY MAKE COMPUTERS, THEY MAKE MEMORY CHIPS; CORRECT?

A: ALL TRUE, YES.

Q: OKAY. AND WHAT AP HERE REFERS TO IS AN APPLIED PROCESSOR; RIGHT?

A: THAT'S MY UNDERSTANDING.

Q: SO THIS IS A REPORT THAT'S NOT DONE BY THE

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AREA THAT MAKES AND MANUFACTURES THESE PHONES, BUT BY THE AREA THAT MANUFACTURES PARTS TO BE SOLD TO PEOPLE LIKE NOKIA, OTHER PHONE COMPANIES; RIGHT?

A: YES. AT THE TIME SAMSUNG WASN'T REALLY IN THE SMARTPHONE MARKET, SO I WOULD AGREE.

Q: OKAY. SO -- I MEAN, SAMSUNG DID SELL PHONES; RIGHT?

A: FEATURE PHONES, YES.

Q: BUT THIS ISN'T EVEN RELATED TO FEATURE PHONES. THIS IS THE PART OF SAMSUNG'S BUSINESS THAT SELLS, IN THIS CASE, A PROCESSOR, KIND OF THE BRAIN, YOU KNOW, TO OTHER COMPANIES; RIGHT?

A: WELL, MY ANSWER WOULD BE YES TO OTHER COMPANIES, BUT YES TO ITSELF AS WELL. SO THE CONSIDERATION WAS, WHAT'S THE FEASIBILITY OF THE APPLICATION PROCESSOR IN THE SMARTPHONE MARKET, FOR SAMSUNG AS WELL AS FOR ANYBODY ELSE WHO MIGHT BUY IT FROM SAMSUNG. SO I DON'T THINK IT'S ONE WAY OR THE OTHER, I SUPPOSE.

Q: SO SAMSUNG WOULD MAKE THEM FOR THEMSELVES AND FOR OTHERS?

A: YES.

Q: INCLUDING OTHERS THAT YOU MIGHT THINK ARE ITS COMPETITORS?

A: INCLUDING?

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Q: INCLUDING FOR OTHERS THAT YOU MIGHT THINK ARE ITS COMPETITORS?

A: YES, YES.

Q: JUST AS THEY SOLD THINGS, HARDWARE TO APPLE FOR THE IPHONE; CORRECT?

A: CORRECT.

Q: OKAY. SO IF WE CAN GO TO--I THINK YOU LOOKED AT PAGE 34.37. IT SAYS PAGE 37 ON IT.

AND THIS IS THE "IPHONE EFFECT ANALYSIS"?

A: YES.

Q: AND IT SAYS "PROMOTE POPULARIZATION OF SMARTPHONES BY STRENGTHENING MULTIMEDIA FUNCTIONS SUCH AS FULL BROWSING PLUS PMP." RIGHT?

A: YES.

Q: YOU UNDERSTOOD WHAT SAMSUNG WAS TRYING TO DO WAS TO PROMOTE AT LEAST THIS PART OF ITS BUSINESS TO PROMOTE PEOPLE TO MAKE SMARTPHONES TO INCLUDE FUNCTIONS THAT WOULD BE IN SAMSUNG'S PROCESSOR?

Q: YOU UNDERSTAND WHEN IT SAYS HW, THAT'S TALKING ABOUT THE HARDWARE THAT YOU GET FROM SUPPLIERS; RIGHT?

A: I UNDERSTAND HW TO STAND FOR HARDWARE, YES.

Q: THIS DOES NOT STAND FOR DESIGN, DOES IT, HW?

A: UM--

Q: IN YOUR UNDERSTANDING?

A: I DON'T HAVE AN UNDERSTANDING BEYOND WHAT IT SAYS ON THE SCREEN THERE.

Q: RIGHT. AND FROM WHAT IT SAYS ON THE SCREEN, WHICH TALKS ABOUT COMPONENTS, LIKE THE TOUCHSCREEN, U/I, THE VIDEO RESOLUTION, THE FLASH MEMORY AND ALL THAT, WHAT THEY'RE TALKING ABOUT IS THEIR COMPETITORS' HARDWARE PERFORMANCE SO THEY CAN SELL THEIR MEMORY CHIPS; RIGHT?

A: AS A GENERAL POINT ABOUT THIS DOCUMENT, YES, THAT -- I WOULD AGREE WITH YOU, THAT IS PART OF THE CONSIDERATION, TO STIMULATE DEMAND FOR SMARTPHONES, I DO AGREE WITH THAT.

Q: AND YOU WOULD AGREE THAT IT WOULD BE INCORRECT AND MISLEADING TO SUGGEST THAT THIS IS SAYING THAT SAMSUNG'S COMPETITORS SHOULD COPY APPLE'S IPHONE DESIGNS?

LOOK AT ME, NOT OVER THERE, OKAY? I'M

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ASKING THE QUESTION, NOT YOUR COUNSEL. YOU WOULD AGREE WITH ME, IT WOULD BE
MISLEADING AND IMPROPER TO SUGGEST THAT THIS IS SAYING THAT, THAT THE IPHONE DESIGN THAT'S -- THAT THEY HAVE A PATENT ON OR THE TRADE DRESS, SHOULD BE COPIED?

A: I DON'T THINK I EVER SAID THAT, OR EVEN TESTIFIED AT ALL CONCERNING THIS PARTICULAR PAGE.

Q: OKAY. SO, SO -- AND YOU WOULDN'T TESTIFY TO THAT BECAUSE THAT WOULD BE MISLEADING TO SUGGEST THAT; RIGHT?

A: IT WOULD BE BEYOND MY ROLE HERE IN CALCULATING DAMAGES TO TALK ABOUT WHETHER OR NOT SAMSUNG COPIED OR NOT. THAT'S JUST NOT MY ROLE IN THIS CASE ONE WAY OR THE OTHER.

Q: WELL, YOU DON'T READ THIS AS SUGGESTING THAT, THAT SAMSUNG OR ITS COMPETITORS COPY APPLE'S DESIGNS?

A: IT'S NOT SOMETHING I'VE TESTIFIED TO, NOR DO I FEEL COMFORTABLE TESTIFYING ONE WAY OR THE OTHER TO IT. IT'S JUST BEYOND THE SCOPE OF MY ROLE AND EXPERTISE. I'M NOT HERE TO TALK ABOUT WHETHER THERE'S LIABILITY OR WHETHER THEY COPIED.

Q: BUT -- NO, NO. BUT YOU PUT UP PAGES, YOU INTERPRETED THEM, YOU READ THEM. YOU CAN READ.

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YOU DID THAT IN YOUR DIRECT; RIGHT?

A: I READ THE PAGES THAT HAD TO DO WITH DEMAND, AND IN PARTICULAR HERE, DEMAND FOR THE IPHONE AND DEMAND FOR A PARTICULAR DESIGN WHERE IT SAYS DESIGN.

BUT I DIDN'T TAKE PAGES WHERE IT DOESN'T SAY THAT AND SAY THAT THEY ARE EASY TO COPY THE DESIGN.

Q: OKAY. SO I'M JUST SAYING, AS SOMEONE WHO'S READ A LOT OF THIS SORT OF STUFF, I MEAN, THESE KINDS OF PRESENTATIONS, APPLE AND SAMSUNG MADE, THAT DOESN'T HAVE ANYTHING TO DO WITH DESIGN, DOES IT? I MEAN, JUSTA: I THINK YOU'RE WORRIED ABOUT IT, THAT IT SAYS EASY TO IMITATE OR COPY, AND YOU WANT ME TO SAY SOMETHING ABOUT IT OR NOT AND I -- IT'S NOT WHAT I WAS ASKED TO DO. IT'S NOT MY ROLE IN THIS CASE. I DON'T HAVE ANY EXPERTISE ABOUT THAT. I'M NOT A LAWYER. I'M NOT AN ENGINEER. I'M NOT A DESIGN EXPERT. I'M A FINANCIAL EXPERT.

Q: WELL, ANOTHER DOCUMENT YOU LOOKED AT WAS 194, AND THIS WAS DATED MARCH 2010. AND I WANT TO ASK YOU ABOUT THIS.

OBVIOUSLY THE IPHONE WAS PRETTY

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SUCCESSFUL.

A: PRETTY?

Q: PRETTY SUCCESSFUL.

A: YES, IT WAS. IS.

Q: AND APPLE BECAME, YOU KNOW, EARLY ON, BASICALLY THE TOP SELLER IN THE SMARTPHONE MARKET?

A: THEY WERE FOR A WHILE, YES.

Q: AND YOU WOULD EXPECT COMPETITORS TO LOOK AT EACH OTHER, THIS ONE IS DOING REALLY WELL, AND YOU WOULD EXPECT THEM TO LOOK AT EACH OTHER'S PRODUCTS AND EVALUATE THEM; RIGHT?

A: I WOULD.

Q: AND THINGS LIKE -- WE CAN GO TO, RIGHT HERE, "THIS IS BEING INTERPRETED AS INSTRUCTION TO THINK ABOUT AND DECIDE ALL MATTERS FROM THE PERSPECTIVE OF THE USER (NOT SUPPLIERS OR PROVIDERS)."

DO YOU SEE THAT?
A: I DO.

Q: "THE MOST REPRESENTATIVE EXAMPLE IS OBVIOUSLY THE IPHONE."
DO YOU SEE THAT?
A: YES.

Q: AT ONE POINT, THE MANUFACTURERS WERE MAKING THEIR PHONES FOR THE VARIOUS CARRIERS, THE CARRIER'S PHONE DESIGN AND THAT WAS A BIG PART OF

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THE PROCESS; RIGHT?

A: YES.

Q: AND APPLE WENT TO AT&T AND APPLE, ONE OF THE THINGS IT DID WAS TO MAKE ITS PHONES AND THINK ABOUT -- KIND OF IGNORE WHAT THE CARRIERS WANTED AND LOOK AT WHAT THE CONSUMER WANTED? SOMEWHAT?

A: IS THAT : YEAH.

A: I DON'T KNOW. I DON'T THINK THEY IGNORED WHAT THE CARRIERS WANTED. I DON'T KNOW.

Q: AND YOU WOULD AGREE THAT ONE THING YOU SHOULD DO AS A COMPETITOR IS LEARN FROM YOUR COMPETITION; RIGHT?

A: THAT WOULD BE A GOOD THING, SURE.

Q: SO, FOR EXAMPLE, IF YOU DISCOVER YOUR COMPETITION IS SELLING A LOT OF PHONES BY INCREASING ITS SCREEN SIZE, THEN YOU MIGHT THINK, "HEY, SHOULD WE INCREASE OUR SCREEN SIZE?"

A: WELL, UNLESS THAT COMPETITOR HAS INTELLECTUAL PROPERTY PROTECTION ON THE SCREEN SIZE, THEN YOU SHOULDN'T DO THAT.

Q: RIGHT. UNLESS YOUR COMPETITOR HAS THE EXCLUSIVE RIGHT TO PREVENT EVERYBODY ELSE FROM

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DOING IT WHO HASN'T LICENSED, THEN YOU WOULD WANT TO LOOK AT HOW WELL YOUR COMPETITOR IS DOING AND SAY, "HEY, CONSUMERS LIKE A BIGGER SCREEN. I MIGHT DO A BIGGER SCREEN." RIGHT?

A: YES.

Q: OR "CONSUMERS LIKE A SEVEN INCH AS OPPOSED TO A TEN INCH TABLET, MAYBE I SHOULD DO A SEVEN INCH TABLET." RIGHT?

A: YES.

Q: AND SAMSUNG DID THE SEVEN INCH TABLET?

A: THEY DID.

Q: AND YOU KNOW THAT IBM -- I'M SORRY -- THAT APPLE INTERNALLY DISCUSSED, "MAYBE WE SHOULD DO A SEVEN INCH TABLET"?

A: I DON'T HAVE A RECOLLECTION. I DON'T REMEMBER.

Q: OKAY. AND IF WE CAN GO ON DOWN HERE TO THIS PARAGRAPH, "IN THE END, WE MUST LEARN THROUGH THE LESSONS OF THE IPHONE THAT JUST PROVIDING EVERY GOOD FEATURE ISN'T THE WAY TO GO ABOUT IT. ALTHOUGH EVERYONE WOULD AGREE WITH THIS, WE WOULD FACE HUGE OBSTACLES."

AND IT GOES ON AT THE END, AT THE NEXT PARAGRAPH, SAYING, "I'M NOT SAYING TO MAKE A UX" -- AND YOU UNDERSTAND THAT'S USER INTERFACE; RIGHT?

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A: YES.

Q: -- "THAT IS EXACTLY IDENTICAL TO THE IPHONE, BUT I AM SAYING TO LEARN THE WISDOM OF THE IPHONE AND RECOGNIZE THE STANDARD OF THE INDUSTRY WHICH WAS SET BY THEM ALREADY."

DO YOU SEE THAT?

A: I DO.

Q: OKAY. AND THAT'S EXACTLY WHAT A COMPETITOR IS SUPPOSED TO DO? IT'S SUPPOSED TO LOOK AT WHAT ITS COMPETITION DOES WELL AND TRY TO DO AS GOOD OR BETTER, UNLESS IT'S PREVENTED BY SOME -- BY
SOMETHING FROM DOING THAT, LIKE UNLESS APPLE HAS THE EXCLUSIVE RIGHT; RIGHT?

A: THAT'S CORRECT.

Q: FOR EXAMPLE, IF WE GO DOWN HERE TO NUMBER 4, ONE OF THE THINGS HE SAYS IS "SHALL WE OFFER ALL OF DELTA AS A FUNCTION, WHICH HAS MORE FUNCTIONALITY THAN THE IPHONE?"

RIGHT?
YOU SEE THAT?

A: I DO.

Q: AND SO HE'S THINKING, SHOULD WE DO SOME OF THESE THINGS? RIGHT? THAT'S WHAT COMPETITORS SHOULD DO IN THE MARKET?

A: CAN DO, YES.

MR. PRICE: JUST A SECOND, YOUR HONOR.

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(PAUSE IN PROCEEDINGS.)

MR. PRICE: YOUR HONOR, PASS THE WITNESS.

THE COURT: OKAY. IT'S 1:28. ANY REDIRECT?

MS. KREVANS: YES, YOUR HONOR.

THE COURT: ALL RIGHT.
IT'S 1:28. GO AHEAD, PLEASE.

REDIRECT EXAMINATION

BY MS. KREVANS:

Q: LET ME START WITH A QUESTION WHERE MR. PRICE ENDED UP.

CAN WE PUT BACK UP PLAINTIFF'S EXHIBIT
34.

AND HE WAS ASKING YOU ABOUT SOMETHING ON, I THINK, PAGE 35 OF THIS EXHIBIT.

COULD YOU -- I'M SORRY, 37. COULD YOU TURN TO PAGE -- EXHIBIT 34, PAGE 38?

IS THIS THE PAGE THAT HAD THE INFORMATION THAT YOU RELIED UPON, MR. MUSIKA?

A: YES.

Q: AND COULD YOU REMIND US SPECIFICALLY WHAT YOU RELIED ON FROM THESE THREE PAGES ABOUT "IPHONE EFFECT ANALYSIS" IN THE SAMSUNG DOCUMENT?

MR. PRICE: OBJECT. IT WAS ASKED AND
ANSWERED.

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THE COURT: I'M SORRY.
CAN YOU REPEAT THE QUESTION?

(WHEREUPON, THE RECORD WAS READ BY THE COURT REPORTER.)

THE COURT: OVERRULED. GO AHEAD, PLEASE.

THE WITNESS: YES> AS
I WAS INDICATING,
I LOOKED AT THIS REPORT ANALYSIS BY SAMSUNG FOR PURPOSES OF SUPPORT FOR DEMAND, WAS THERE DEMAND?

I'M NOT HERE TO TALK ABOUT COPYING.

AND HERE SPECIFICALLY, FACTORS THAT COULD MAKE AN IPHONE A SUCCESS, EASY, INTUITIVE, USER INTERFACE ON ALL CLASSES, AND THEN MORE SPECIFICALLY, BEAUTIFUL DESIGN.

SO I WAS LOOKING FOR AND FOUND EVIDENCE OF THE DESIGN ELEMENT BEING A FUNCTION OR A FACTOR IN THE DEMAND.

BY MS. KREVANS:

Q: IN SAMSUNG'S OWN WORDS?

A: YES.

Q: OKAY. LET'S LOOK AT ANOTHER THING THAT MR. PRICE ASKED YOU ABOUT.

COULD WE PUT UP SAMSUNG'S SLIDE SDX 3909.053, PLEASE, MR. LEE.

DO YOU RECALL MR. PRICE ASKED YOU A

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NUMBER OF QUESTIONS ABOUT CAPTIVATE SALES AND APPLE'S CAPACITY ABOUT THIS SLIDE IN ASKING YOU WHETHER THIS WAS $199 MILLION OUT OF YOUR LOST PROFITS CALCULATION?

A: RIGHT.

Q: DO THE NUMBERS THAT MR. PRICE HAS SET FORTH ON THIS SLIDE ADD UP TO $199 MILLION?

Q: OKAY. LET'S GO BACK TO A QUESTION THAT MR. PRICE ASKED YOU EARLIER BEFORE LUNCH.

DO YOU RECALL -- I THINK THIS WAS BEFORE LUNCH. DO YOU RECALL HE WAS ASKING YOU ABOUT WHAT WOULD HAPPEN IF THE JURY FOUND THAT SOME PATENTS WERE, AND TRADE DRESS WERE NOT INFRINGED, BUT OTHER PATENTS WERE INFRINGED?

A: YES.

Q: AND HE ASKED YOU WHETHER YOU HAD GIVEN THE JURORS INFORMATION THAT WOULD LET THEM FIGURE OUT WHAT WOULD BE THE APPROPRIATE ROYALTIES OR DAMAGES IN THAT SITUATION.

YOU SAID THAT YOU HAD GIVEN THEM THE TOOLS?

A: YES, THAT'S CORRECT.

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Q: AND WHAT TOOLS DID YOU GIVE THE JURORS THAT WOULD LET THEM FIGURE OUT ROYALTIES ON A PATENT-BY-PATENT BASIS?

A: WELL, I'M GOING TO GIVE A BROAD -- A GENERAL ANSWER AND THE COURT CAN ASK ME TO DO IT IN A MORE DETAILED FASHION.

BUT I WOULD POINT THE JURORS TO PX 25A-1 BECAUSE I THINK THE INFORMATION THAT'S CONTAINED IN THERE, WE WENT THROUGH IN SUMMARY, WOULD PERMIT THEM TO ADJUST DATES AND ADJUST VOLUMES AND ADJUST THEIR DAMAGES APPROPRIATELY BASED ON THE CHANGES THAT HE WAS SUGGESTING.

Q: COULD YOU SHOW US THE LAST PAGE OF 25A-1, MR. LEE.

WHAT IS THE INFORMATION THAT IS SET OUT ON THE LAST PAGE OF EXHIBIT 25A-1?

A: IT IS A DETAILED SCHEDULE OF, PATENT-BY-PATENT, THE ULTIMATE REASONABLE ROYALTY RATES. SO ON THE LEFT, FOR EXAMPLE, THE '381 PATENT, ITS ANALYSIS IN BETWEEN WOULD GO ALL THE WAY TO THE RIGHT, THE ROYALTY IS $2.02 FOR THAT.

AND SO FORTH DOWN TO WHERE WE GET TO THE DESIGN AS I HAD INDICATED.

Q: IF -- IF THE JURORS WANTED TO CALCULATE JUST A ROYALTY NUMBER FOR ANY OF THE PATENTS THAT ARE SET

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OUT ON THIS CHART, WOULD THEY NEED INFORMATION BEYOND WHAT IS ON THIS PAGE?

A: WELL, THEY'D NEED UNITS, YES.

Q: AND WHERE WOULD THEY FIND THAT?

A: THEY WOULD FIND THAT -- THEY CAN DETERMINE WHICH PRODUCTS WERE ACCUSED OF INFRINGING WHICH PATENT UP ON PAGE 3 OF 16 IN 25A.

Q: OKAY. SO SAME EXHIBIT, PAGE 3?

A: YES.

Q: OKAY. AND THIS IS A CHART THAT TELLS US WHAT?

A: IT TELLS US, PRODUCT-BY-PRODUCT, WHICH PATENTS ARE ACCUSED. SO LET'S JUST USE AN EXAMPLE, CAPTIVATE. IF WE CAN BLOW THAT CAPTIVATE UP. WE CAN SEE THE CAPTIVATE IS ACCUSED OF INFRINGING THE '163, THE '381, AND THE '915. SO YOU WOULD MULTIPLY THE RATE TIMES -- FOR EACH OF THOSE UTILITY PATENTS.

IF WE MOVED ACROSS, WE WOULD SEE THAT IT'S NOT ACCUSED OF INFRINGING ANY OF THE DESIGN PATENTS EXCEPT THE '305. AND IF YOU MOVE FURTHER ACROSS, IT'S ACCUSED OF INFRINGING THREE OF THE TRADE DRESS.

BUT AS WE REMEMBER FROM THE, FROM THE ROYALTY RATE, WHETHER IT'S ONE OR ALL OF THEM, THAT WOULD BE $24.

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SO THEY KNOW, ONCE IT'S INFRINGING ONE OF THOSE EITHER DESIGN PATENTS OR TRADE DRESS, IT'S $24, AND THEN THE UNIT TIMES EACH OF THE UTILITY PATENTS THAT ARE INFRINGED.

Q: AND WHERE IN THE INFORMATION THAT YOU'VE GIVEN THE JURY WOULD THEY FIND THE NUMBER OF UNITS SOLD?

A: THE NUMBER OF UNITS SOLD, WE WOULD GO UP TO THE JOINT EXHIBIT, 1500, AND REMEMBER WE KIND OF STARTED THERE. THAT'S THAT DETAILED -- THERE WE GO -- AND THERE'S PRODUCT-BY-PRODUCT AND PERIOD-BY-PERIOD BOTH IN UNITS AND IN DOLLARS.
HONOR. RECROSS?

MS. KREVANS: NOTHING FURTHER, YOUR HONOR.

THE COURT: OKAY. THE TIME IS 1:34. ANY
RECROSS-EXAMINATION
BY

MR. PRICE:

Q: SIR, I HEARD YOU SAY SOMETHING ABOUT $24, AND THAT PART OF YOUR CALCULATION ASSUMES THAT THERE HAS BEEN INFRINGEMENT OF A DESIGN PATENT FOR TRADE DRESS.

A: ONE OR MORE, YES.

Q: OKAY. SO IF WE'RE TALKING ABOUT JUST THE, FOR EXAMPLE, THE '381 PATENT, YOU WOULDN'T BE USING THAT NUMBER?

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A: NO, YOU WOULD NOT.

Q: AND YOU SAID THAT YOU COULD GO FROM YOUR ROYALTY, ASSUMING IT'S CORRECT, LOOKING AT THE GRAPH AND THEN LOOKING AT 1500; IS THAT RIGHT? A YES.

Q: WELL, IS IT TRUE THAT -- FOR THE CAPTIVATE HERE, FOR EXAMPLE, HAVE YOU MADE A FINDING THAT ALL OF THE CAPTIVATE, OR YOU'RE ASSUMING THAT ALL OF THE CAPTIVATE PHONES INFRINGE A CERTAIN CLAIM, A CERTAIN PATENT?

A: WELL, DEPENDS ON THE TIMING OF THE PATENT AGAIN.

Q: AND WHEN YOU LOOK AT THESE NUMBERS ON 1500, I MEAN, THERE'S A CERTAIN TIMEFRAME, RIGHT, YEAH, THAT YOU HAVE TO LOOK AT TO SEE WHETHER OR NOT SOMETHING INFRINGES THE PATENT; RIGHT?

A: ABSOLUTELY RIGHT.

Q: AND HAVE YOU DONE THAT ON 1500?

A: I'M SORRY. HAVE I DONE WHAT ON 1500?

Q: IDENTIFIED WHICH UNITS INFRINGE AND WHICH DON'T?

A: ALL THESE UNITS INFRINGE.

Q: OKAY. SO YOU'RE SAYING --

A: THESE ARE ALL ACCUSED -- THIS IS EQUAL TO THE 22 MILLION UNITS OF THE ACCUSED DEVICES AND THE $8

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BILLION. SO EVERY UNIT ON HERE IS INFRINGING.

Q: OKAY. SO YOUR TESTIMONY IS THAT IF YOU LOOK AT 1500, EVERY UNIT ON HERE IS INFRINGING AND ALL YOU HAVE TO DO IS ADD THESE UP? IS THAT WHAT YOU'RE SAYING?

A: ADD WHAT UP?

Q: WELL, I ASSUME YOU'RE TALKING ABOUT ADDING UP UNITS. WHERE IT SAYS UNITS -- FOR EXAMPLE, UNDER CAPTIVATE, IT HAS UNITS. DO YOU SEE THAT?

A: I DO.

Q: AND YOU'RE SAYING YOU JUST HAVE TO ADD THOSE UNITS UP AND THEY'RE ALL INFRINGING?

A: THEY ARE ALL INFRINGING --

Q: ALLEGEDLY?

A: I'M SORRY?

Q: I'M SORRY. APPLE'S CLAIMED THEY INFRINGE?

A: YOU TRAILED OFF.

Q: THE IPAD -- YOU'RE ASSUMING THAT APPLE ALLEGES THAT ALL OF THESE UNITS INFRINGE?

A: ONE OR MORE OF THE PATENTS OR TRADE DRESS, YES.

MR. PRICE: JUST ONE SECOND.

(PAUSE IN PROCEEDINGS.)

BY MR. PRICE:

Q: AND IS IT YOUR UNDERSTANDING THAT FOR THESE

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PARTICULAR PATENTS, THAT THERE ARE DIFFERENT NOTICE DATES FROM WHICH DAMAGES RUN?

A: YES.

Q: AND IS THAT REFLECTED ON THIS CHART, 1500, THE
DIFFERENT NOTICE DATES?

A: NO.

Q: AND WOULDN'T YOU HAVE TO APPLY THAT TO FIGURE OUT WHAT THE DAMAGES SHOULD ACTUALLY BE?

A: WELL, YOU'RE ASSUMING THAT THERE ARE DIFFERENT NOTICE DATES.

Q: AND WERE YOU ASKED -- THIS IS ANOTHER FACT YOU WERE ASKED TO ASSUME, THAT THERE'S ONLY ONE NOTICE DATE?

A: I'M -- THAT'S A LEGAL DETERMINATION AS TO WHAT THE NOTICE DATE IS.

BUT THESE DAMAGES ARE BASED ON A SPECIFIC NOTICE DATE, YES.

Q: OKAY. WHAT DAMAGES -- WHAT NOTICE DATE ARE THESE BASED ON?

A: THESE ARE BASED ON -- FOR THE TRADE DRESS, IT WOULD BE AT THE TIME THAT THE TRADE DRESS -- FOR THE UNREGISTERED TRADE DRESS, I'M SORRY, AT THE TIME THE PRODUCTS WERE SOLD SINCE THE UNREGISTERED TRADE DRESS WAS IN THE MARKET PRIOR TO THE LAUNCH OF THE ACCUSED PRODUCTS. SO THOSE WOULD BE FOR THE

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ENTIRE PERIOD.

FOR ALL OTHER DEVICES THAT ARE IN HERE,
IT'S THE AUGUST 11TH OF 2010, I THINK -- I'D HAVE TO GO RESEARCH, BUT I THINK IT'S AUGUST 11TH, 2010 IS THE NOTICE PERIOD.

Q: AND THAT'S REFLECTED ON YOUR CHART HOW?

A: IT'S REFLECTED IN HERE SOMEWHERE. THAT'S THE DATE, I BELIEVE, AT WHICH THE FIRST MEETING BETWEEN APPLE AND SAMSUNG TOOK PLACE WHERE APPLE NOTIFIED SAMSUNG OF THEIR COMPLAINT.

Q: AND IF WE COULD LOOK AT -- YOU WERE SHOWN PAGE 34.38, PLAINTIFF'S EXHIBIT, WHERE YOU'RE TALKING ABOUT DEMAND.

AND I THINK THIS WAS BLOWN UP, SUCCESS FACTORS FOR THE IPOD -- I'M SORRY -- FACTORS THAT COULD MAKE IPHONE A SUCCESS.

DO YOU SEE THAT?

A: YES.

Q: AND DO YOU SEE HOW, WHERE IT TALKS ABOUT THE INTUITIVE U/I; RIGHT?

A: YES.

Q: AND IT SAYS BEAUTIFUL DESIGN?

A: YES.

Q: AND THEN IT SAYS SEAMLESS INTEGRATION OF HARDWARE. AGAIN, HARDWARE IS NOT THE SAME AS

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DESIGN, IS IT, AS IT'S BEING USED HERE?

A: I DON'T KNOW.

Q: BUT THAT'S ACTUALLY THE PART YOU WERE ASKED TO LOOK AT. YOU SAID YOU UNDERSTOOD WHAT YOU WERE ASKED TO LOOK AT, SO I JUST -- LOOKING AT THIS, YOU REALIZE THAT THIS DOCUMENT, GIVEN WHERE IT'S COMING FROM, WHICH IS THE HARDWARE PART OF THE COMPANY THAT MAKES THESE BRAINS, PROCESSORS, IT'S DISTINGUISHING BETWEEN THE DESIGN AND THE HARDWARE? IT'S DISTINGUISHING; RIGHT?

A: IT'S LISTED SEPARATELY, YES.

Q: SO THEY'RE TALKING ABOUT DIFFERENT THINGS?

A: I DON'T KNOW.

(PAUSE IN PROCEEDINGS.)

MR. PRICE: MY BRAIN TRUST TELLS ME I'M DONE. THANK YOU.

THE WITNESS: THANK YOU.

THE COURT: ALL RIGHT. THE TIME IS NOW is 1:30.

IS THERE GOING TO BE ANY RE-REDIRECT OR NO?

MS. KREVANS: THERE IS VERY BRIEF, YOUR HONOR.

THE COURT: OKAY. IT'S 1:40. GO AHEAD,

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MS. KREVANS: MR. LEE, WOULD YOU PUT UP THAT SAME PAGE? I THINK THAT WAS EXHIBIT 34 AT PAGE 38.
FURTHER REDIRECT EXAMINATION
BY

MS. KREVANS:

Q: MY FIRST QUESTION IS A VERY QUICK ONE, MR. MUSIKA. THE LINE OF -- THIS SAMSUNG DOCUMENT THAT MR. PRICE JUST POINTED YOU TO THAT STARTS WITH THE WORDS "SEAMLESS INTEGRATION OF HARDWARE," WHAT DOES THE WHOLE LINE ACTUALLY SAY?

A: "SEAMLESS INTEGRATION OF HARDWARE, SW," WHICH I UNDERSTAND TO BE SOFTWARE, "AND CONTENTS USING ITUNES."

Q: OKAY. AND COULD YOU GO BACK TO EXHIBIT 25A-1 IN YOUR BINDER?
AND MR. LEE, COULD YOU SHOW US THE SECOND PAGE OF THAT EXHIBIT?
COULD YOU REMIND US WHAT'S SHOWN ON THIS
PAGE?

A: YES. SO THIS IS THE DAMAGE SUMMARY, AND THIS IS THE PAGE THAT SETS FORTH THE NOTICE THAT I WAS RECITING.

Q: OKAY. AND YOU WERE TRYING TO REMEMBER A DATE JUST FROM MEMORY. CAN YOU TELL US WHAT THIS PAGE, WHAT THE ACTUAL DATE WAS IN AUGUST THAT YOU USED

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FOR NOTICE FOR THINGS OTHER THAN UNREGISTERED TRADE DRESS?

A: YES. IT'S LISTED THERE. IT IS AUGUST, BUT IT'S AUGUST 4TH, 2010. I THINK I PROBABLY SAID AUGUST 11TH INCORRECTLY. BUT IT'S AUGUST 4TH, 2010.

MS. KREVANS: THANK YOU VERY MUCH.

THE COURT: ALL RIGHT. IT'S 1:42. ANY RE-RECROSS-EXAMINATION?

MR. PRICE: NO, YOUR HONOR.

THE COURT: ALL RIGHT. MAY THIS WITNESS BE EXCUSED?

MS. KREVANS: HE MAY SUBJECT TO RECALL, YOUR HONOR.

THE COURT: ALL RIGHT. YOU'RE EXCUSED SUBJECT TO RECALL.

THE WITNESS: THANK YOU, YOUR HONOR.

MR. MCELHINNY: YOUR HONOR, SUBJECT TO STIPULATION AND ORDER OF THE COURT AS TO ORDER AND PRODUCTION OF PROOF, WHICH RESERVES OUR CONTRACT, ANTITRUST, UNFAIR COMPETITION AND DECLARATORY JUDGMENT ACTIONS, SUBJECT TO THAT STIPULATION, WE REST OUR CASE-IN-CHIEF.

THE COURT: OKAY. ALL RIGHT. SO LADIES AND GENTLEMEN OF THE JURY, WE

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HAVE TO TAKE CARE OF SOMETHING OUTSIDE YOUR PRESENCE, SO I'M GOING TO EXCUSE YOU FOR NOW.

AGAIN, PLEASE KEEP AN OPEN MIND. PLEASE DON'T DISCUSS THE CASE WITH ANYONE AND PLEASE DON'T DO ANY OF YOUR OWN RESEARCH.
YOU'RE FREE TO TAKE YOUR JURY BOOKS WITH YOU INTO THE JURY ROOM. OKAY? THANK YOU.

(WHEREUPON, THE FOLLOWING PROCEEDINGS WERE HELD OUT OF THE PRESENCE OF THE JURY:)

MR. ZELLER: THANK YOU, YOUR HONOR. SAMSUNG DOES MOVE UNDER RULE 50 AT THIS
TIME FOR APPLE'S FAILURE TO PROVE ITS CLAIMS, AND WE BELIEVE THIS APPLIES TO EVERYTHING THAT APPLE HAS ASSERTED IN THIS CASE.

FOR THE UTILITY PATENTS, APPLE HAS NOT SUBMITTED EVIDENCE LIMITATION-BY-LIMITATION SHOWING INFRINGEMENT. THEY DIDN'T EVEN ATTEMPT TO DO THAT WITH THEIR EXPERTS, AND WE BELIEVE THAT THAT ALONE SHOWS -- ALSO, WE DID SHOW ON CROSS-EXAMINATION THAT THESE WERE NOT INFRINGING.

THE SAME APPLIES FOR THE DESIGN PATENTS. APPLE HAS FAILED TO PROVE INFRINGEMENT.

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IT HAS ALSO FAILED TO TAKE INTO ACCOUNT THE LACK OF FUNCTIONALITY, OR THE FUNCTIONALITY OF THE DESIGNS.

AND ALSO ON TRADE DRESS, IT HAS FAILED TO PROVE THAT TRADE DRESS IS FAMOUS AND THAT IT'S BEEN INFRINGED AND THAT IT'S NOT FUNCTIONAL.

SO WE MOVE ON ALL THE ELEMENTS OF THE CLAIMS, YOUR HONOR.

WITH RESPECT TO DAMAGES, THERE'S NO APPORTIONMENT THAT'S BEEN ESTABLISHED. THERE HAS BEEN NO PRODUCT-BY-PRODUCT DAMAGES THAT HAVE BEEN BROKEN OUT, AND WE BELIEVE THAT THAT'S INSUFFICIENT AS A MATTER OF LAW.
THERE'S NO CAUSATION THAT'S BEEN PROVEN, AND ALSO THEY HAVE -- EXCUSE ME -- ONLY HAD DUPLICATIVE DAMAGES THAT THEY'VE ASSERTED.
AND SO FOR BELIEVE THE JUDGMENT EXCUSE ME.

THE COURT:
ALL THE SAME REASONS, WE IS ALSO WARRANTED ON DAMAGES.
OKAY.

MR. ZELLER: AND ALSO, WE MOVE ON THE
FAILURE TO PROVE WILLFUL INFRINGEMENT.

THE COURT: ALL RIGHT.

MR. ZELLER: AND THEN FINALLY, YOUR HONOR, ALSO ON THE DAMAGES FRONT, JUST TO BE MORE

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SPECIFIC, THERE WAS A FAILURE TO REALLY ACCOUNT FOR REASONABLE ROYALTY, AND THEY ALSO FAILED TO PROVE THAT THERE WAS SUFFICIENT DEMAND FOR, AND CAPACITY FOR APPLE PRODUCTS.

THE COURT: OKAY. ANYTHING ELSE THAT YOU'D LIKE TO STATE ON THE RECORD?

MR. ZELLER: WELL, YOUR HONOR, WE WOULD, OF COURSE, LIKE THE OPPORTUNITY TO OUTLINE THESE IN WRITING. I MEAN, THE COURT DID SAY WE WOULD DO THAT EARLIER.

THE COURT: I HAVE REVIEWED -- EVERY TIME I CHECK OUR ECF, THERE ARE, LIKE, THREE OR FOUR MORE MOTIONS THAT ARE FILED, AND I NEVER HAVE BRIEFING ON RULE 50, NEVER. NEVER, EVER. I'VE NEVER HAD BRIEFING ON RULE 50 BEFORE.
AND JUST IN TERMS OF KEEPING UP WITH ALL OF THE MOTIONS THAT HAVE BEEN FILED, TO SAY NOW DO ANOTHER ORDER ON RULE 50 WHEN I NEVER HAVE BRIEFING ON RULE 50 MOTIONS, I'M SORRY, I JUST DON'T THINK I CAN.

MR. ZELLER: THIS IS, OF COURSE, AN IMPORTANT MOTION, YOUR HONOR.

THE COURT: UNDERSTOOD.

MR. ZELLER: WE OBVIOUSLY WANT TO DO IT FOR PRESERVATION PURPOSES, BUT THE COURT IS

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OBVIOUSLY NOT INCLINED TO GRANT IT IN ANY EVENT, WE WOULD ASK FOR THAT OPPORTUNITY.

OBVIOUSLY APPLE IS GOING TO ARGUE -- WE'RE TRYING TO MAKE OUR GROUNDS SUFFICIENTLY BROAD AT THIS MOMENT MOVING ORALLY IN ORDER TO MAKE SURE THAT WE'VE COVERED EVERYTHING.

BUT WE KNOW, OF COURSE, APPLE IS GOING TO ARGUE LATER THERE'S SOME SORT OF PROCEDURAL DEFAULT.

OBVIOUSLY OUR VIEW IS THEY HAVE NOT PROVEN THEIR CASE, AND THEY HAVEN'T PROVEN IT AS TO ANY OF THE ELEMENTS THAT ARE REQUIRED HERE.

THE COURT SAW THEIR WITNESSES. THEY PUT THEM UP, FOR EXAMPLE, AND THEY SAID "DID YOU DO A SURVEY?" "YES, I DID. THIS IS WHAT IT SHOWED."

WE DON'T THINK THAT THAT IS, AS A MATTER OF LAW, SUFFICIENT IN ORDER TO CARRY THEIR BURDEN, AND WE WOULD BE ABLE TO OUTLINE THESE THINGS AND PROVIDE CITATIONS AT LEAST TO THE EVIDENCE, YOUR HONOR, THAT WE BELIEVE SUPPORTS THAT.
BUT --

THE COURT: I'M UNDERSTANDING YOUR MOTION TO BE MOVING ON ABSOLUTELY EVERY CLAIM THAT APPLE HAS MADE THAT A REASONABLE JURY WOULD NOT HAVE SUFFICIENT EVIDENCE TO RULE IN THEIR FAVOR.

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SO I AM ASSUMING THAT YOU ARE, AND I HEAR YOU, MOVING ON EVERY SINGLE CLAIM THAT APPLE HAS MADE.

MR. ZELLER: THAT IS CORRECT, YOUR HONOR. CERTAINLY WE WILL -- WE DO MOVE ON THAT BASIS.

LET ME GIVE SOME SPECIFIC EXAMPLES, YOUR
HONOR.

FOR EXAMPLE, THEY INTRODUCED ABSOLUTELY NO EVIDENCE WITH RESPECT TO PARTICULAR PHONES THAT THEY CLAIM WERE SOLD IN THE UNITED STATES. THERE IS NO EVIDENCE, FOR EXAMPLE, AS TO THE GALAXY ACE, WHICH IS JX 1030, THE GALAXY S I9000, JX 1007, OR THE GALAXY S II I9100, WHICH IS JX 1032. THERE'S ZERO EVIDENCE THAT'S BEEN ADDUCED IN THIS CASE THAT THOSE HAVE BEEN SOLD IN THE UNITED STATES. THEY REPRESENTED THAT THEY WERE. THEY PROVIDED NO EVIDENCE.

AND I CAN GO THROUGH A MUCH LONGER LIST OF THESE KINDS OF PARTICULARS, YOUR HONOR. WE HAD UNDERSTOOD WE WERE GOING TO DO THIS IN WRITING, AND SO WHEN THE COURT ASKED, IS THERE ANYTHING FURTHER WE WANT TO SAY, THERE IS MUCH MORE WE WANT TO SAY.

BUT WE THINK THAT IT'S MORE EFFICIENT TO SIMPLY PUT IT IN WRITING. I CAN GO DOWN THIS LIST AND I'M CERTAINLY HAPPY TO DO IT NOW.

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THE COURT: DO IT NOW. I'LL GIVE YOU FIVE MINUTES. GO AHEAD.

MR. ZELLER: YOUR HONOR, WITH ALL RESPECT, FIVE MINUTES NOT ENOUGH WHERE SOMEONE IS ASKING FOR TWO AND A HALF BILLION DOLLARS ON A WHOLE HOST OF CLAIMS.

THE COURT: WHATEVER YOU HAVE. GO AHEAD. I'M GIVING YOU AN OPPORTUNITY TO MAKE YOUR RECORD. WHATEVER YOU WOULD LIKE, GO AHEAD.

MR. ZELLER: I MENTIONED THAT THERE WAS NO EVIDENCE THAT WAS PROVIDED AS TO CERTAIN DEVICES BEING SOLD IN THE UNITED STATES BY SAMSUNG.
IN ADDITION, APPLE PRESENTED NO EVIDENCE THAT SHOWED THAT THE GEM, THE SAMSUNG GEM PHONE, WHICH IS JX 1020, INFRINGES THE '381 PATENT.
AND, IN FACT, THAT WAS NEVER DISCLOSED IN THEIR LOCAL PATENT CONTENTIONS AS REQUIRED.
THERE'S NO EVIDENCE OF ACTIVE INDUCEMENT BY SAMSUNG IN THIS CASE.
ALL THAT HAS BEEN ADDUCED IN THIS CASE SO FAR BY APPLE IS THAT SAMSUNG, THE PARENT, WAS AWARE.
BUT THAT IS INSUFFICIENT AS A MATTER OF LAW FOR ACTIVELY INDUCING INFRINGEMENT.
WELL, WHY DON'T YOU HAVE

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AS WE MENTIONED EARLIER, OF COURSE, THERE IS NO EVIDENCE THAT APPLE HAS MET OR PROVEN DECEPTIVE SIMILARITY IN THE CONTEXT OF PURCHASING FOR THE DESIGN PATENTS AS REQUIRED.
AS A MATTER OF FACT, APPLE'S EXPERTS ACKNOWLEDGED THAT THAT IS NOT THE ANALYSIS THAT THEY DID. THEY DIDN'T EVEN ATTEMPT TO APPLY THE PROPER LEGAL STANDARD UNDER THE LAW.
IN FACT, THE ONLY WITNESS WHO TESTIFIED ABOUT THE HARDWARE DESIGN PATENT SIMILARITIES WAS PETER BRESSLER, AND HE SPECIFICALLY ACKNOWLEDGED THAT IT WAS HIS UNDERSTANDING THAT IT WAS NOT NECESSARY THAT THE SIMILARITY BE DECEPTIVE.
OF COURSE, THE COURT IS AWARE THAT UNDER GORHAM, THE GORHAM STANDARD AS ARTICULATED BY THE SUPREME COURT AND AS CONFIRMED BY EGYPTIAN GODDESS, APPLE HAS TO PROVE THAT THERE -- THAT THE SIMILARITY IS SUCH THAT IT WOULD DECEIVE THE ORDINARY OBSERVER IN THE PURCHASING CONTEXT.
AND MR. BRESSLER ACKNOWLEDGED THAT THAT WAS NOT THE STANDARD HE APPLIED.
IN FACT, AGAIN, HE WAS THE ONLY PERSON WHO OFFERED ANY TESTIMONY ON THESE ALLEGED SIMILARITIES.
APPLE DID, OF COURSE, OFFER VARIOUS

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HEARSAY BLOG STATEMENTS AND PRESS REPORTS, BUT THE COURT HAS SAID THAT THAT IS NOT ADMISSIBLE FOR THE TRUTH, SO IT CANNOT BE RELIED UPON BY APPLE TO PROVE A SUBSTANTIAL SIMILARITY.
ALSO, MR. BRESSLER ACKNOWLEDGED HE HAD NO REAL WORLD EVIDENCE OF ANY KIND OF DECEPTION OR SIMILARITIES BETWEEN THE DESIGNS.
IN ADDITION, THERE WERE DIFFERENCES THAT WERE SHOWN WITH RESPECT TO THE PRODUCTS AT ISSUE THAT ALSO SHOWED THAT THEY ARE NOT INFRINGED. I CAN RECITE AS MUCH AS THE COURT WOULD LIKE ON THAT, BUT AN EXAMPLE WOULD BE WITH RESPECT TO THE GALAXY 10.1.
MR. STRINGER TESTIFIED THAT AN IMPORTANT ASPECT OF THIS DESIGN WAS THAT IT WAS A SINGLE VESSEL ON THE BACK.
WE DON'T MEET THAT LIMITATION. WE DO NOT PRACTICE THAT, AND THAT IS UNDISPUTED. IT'S NOT A SINGLE VESSEL WHEN YOU'RE TALKING ABOUT THE GALAXY TAB 10.1. IT IS A DIFFERENT DESIGN.
AND THERE HAS BEEN NO REBUTTAL TO THAT POINT WHATSOEVER.
SAME THING WITH RESPECT TO THE HARDWARE DESIGNS FOR WHAT WE AT LEAST SHORTHAND CALL THE SMARTPHONES.

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MR. STRINGER TESTIFIED THAT AN INTEGRAL PART OF WHAT WAS NEW AND ORIGINAL ABOUT THOSE DESIGNS WAS THAT THEY WERE FLAT.
SAMSUNG DOES NOT HAVE THAT SAME DESIGN, AND AGAIN, THAT IS UNDISPUTED.
WITH RESPECT TO THE '305 DESIGN PATENTS, ESSENTIALLY IT'S THE SAME STORY.
DR. KARE WAS THE WITNESS WHO TESTIFIED ABOUT THAT DESIGN PATENT. SHE DID NOT, AND DID NOT EVEN ATTEMPT, TO APPLY THE GORHAM DECEPTION IN PURCHASING STANDARD.
IN FACT, ALL SHE OFFERED AN OPINION ON WAS ESSENTIALLY THAT SHE THOUGHT THE OVERALL SIMILARITIES WERE THERE, WHICH IS NOT SUFFICIENT UNDER GORHAM.
IN ADDITION, SHE ALSO ACKNOWLEDGED THAT SHE PAID NO ATTENTION AND DID NOT FACTOR INTO HER ANALYSIS ANY KIND OF FUNCTIONALITY.
AND OF COURSE THE COURT IS AWARE THAT FUNCTIONALITY HAS TO BE FACTORED OUT OF ANY KIND OF ANALYSIS UNDER RICHARDSON, THE FEDERAL CIRCUIT DECISION IN RICHARDSON, IN ORDER TO FIND INFRINGEMENT.
AND ALSO, DR. KARE DID NOT EVEN CONSIDER PRIOR ART, SHE ADMITTED THAT AS WELL, WHICH, OF

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COURSE, IS AN INTEGRAL PART OF THE GORHAM STANDARD AS FURTHER ARTICULATED BY EGYPTIAN GODDESS, AND AGAIN, THIS IS AN ADMISSION BY HER THAT SHE DID NOT DO SO.
I'LL TALK A LITTLE BIT MORE ABOUT DILUTION IN A MOMENT, BUT DR. WINER, FOR EXAMPLE, ACKNOWLEDGED THAT THERE WAS NO EVIDENCE OF DILUTION.
I MEAN, EVEN THOUGH WHAT APPLE WOULD ARGUE IS THAT THE STANDARD IS LIKELIHOOD OF DILUTION, THE FACT IS THAT THESE PHONES HAVE NOW BEEN IN THE MARKET, THESE TABLETS, FOR A CONSIDERABLE PERIOD OF TIME. IF APPLE CANNOT POINT, AT THIS STAGE, MONTHS AND YEARS LATER TO ANY ACTUAL EVIDENCE OF LOSS, DILUTION, BLURRING AND THE LIKE, IT IS OBVIOUSLY UNLIKELY AT THIS POINT. THAT IS THE ONLY ARGUMENT THEY HAVE, FRANKLY, ON DILUTION.
I WOULD FURTHER SAY, YOUR HONOR, WITH RESPECT TO THE TRADE DRESS DILUTION ARGUMENTS -- ACTUALLY, LET ME STEP BACK AND TALK ABOUT THE INFRINGEMENT ARGUMENT THAT APPLE HAS MADE, WHICH IS, OF COURSE, AT THIS POINT ONLY LIMITED TO THE, TO AN ACCUSATION AGAINST THE GALAXY TAB 10.1.
AND ALSO, THIS WOULD APPLY EQUALLY TO

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DILUTION.
BUT LET ME START WITH FUNCTIONALITY, YOUR HONOR, WHICH IS THAT APPLE BEARS THE BURDEN OF PROVING, WITH RESPECT TO THE UNREGISTERED TRADE DRESS, THAT THAT TRADE DRESS IS NOT FUNCTIONAL.
IT HAS NOT DONE SO. IT OFFERED NO EVIDENCE TO SUBSTANTIATE THAT.
DR. BRESSLER ACKNOWLEDGED HE APPLIED A STANDARD FOR NON-FUNCTIONALITY THAT WAS, NUMBER ONE, INCOMPLETE; AND, NUMBER TWO, WRONG.
WHAT I WOULD ALSO SAY IN THIS REGARD, YOUR HONOR, IS THAT WITH RESPECT TO TRADE DRESS -- AND THIS IS FROM LEATHERMAN, THE NINTH CIRCUIT DECISION IN LEATHERMAN, IT SAYS, "FOR AN OVERALL PRODUCT CONFIGURATION TO BE RECOGNIZED AS A TRADEMARK, THE ENTIRE DESIGN MUST BE NON-FUNCTIONAL."
THAT'S WHAT THEY HAVE TO PROVE. YOU CAN'T JUST SIMPLY PICK AND CHOOSE AMONG THIS PRODUCT CONFIGURATION THAT THEY'RE CLAIMING AND THEN JUST SORT OF WAVE THEIR HAND AND SAY IT'S NOT FUNCTIONAL.
THEY MUST PROVE THAT THAT ENTIRE DESIGN IS NOT FUNCTIONAL. MR. BRESSLER ADMITTED THAT PORTIONS OF THAT DESIGN AREN'T THAT FUNCTIONAL.

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THAT, IN ITSELF, DEFEATS APPLE'S ABILITY TO CARRY FORWARD THAT CLAIM.
AND THAT APPLIES EQUALLY TO DILUTION AS WELL, BECAUSE AS THE COURT IS AWARE, WITH RESPECT TO ITS UNREGISTERED TRADE DRESS, APPLE BEARS THE BURDEN OF PROVING THAT BOTH WITH RESPECT TO THE, THE INFRINGEMENT CLAIM, AS WELL AS THE DILUTION CLAIM.
THEN, AS THE COURT IS ALSO AWARE WITH RESPECT TO THE DILUTION CLAIM, ALL THAT THAT'S -- YOU KNOW, THAT ALSO NOW INCLUDES THE PHONES.
AND WE DON'T BELIEVE THAT THERE'S BEEN ANY KIND OF EVIDENCE SHOWING THAT THERE'S A LIKELIHOOD OF DILUTION AND, SIMILARITY, FOR TRADEMARK INFRINGEMENT, NO EVIDENCE OF LIKELIHOOD OF CONFUSION.
IN FACT, AGAIN, APPLE'S OWN EXPERTS ACKNOWLEDGED THAT BY THE TIME PEOPLE ACTUALLY COMPLETE THE PURCHASING PROCESS, BASED ON THE INFORMATION THAT THEY HAVE AVAILABLE TO THEM, THEY KNOW WHAT PHONE THEY ARE BUYING.
APPLE, OF COURSE, RECOGNIZING THAT THAT IS FATAL TO THEIR CLAIMS, HAS TRIED TO ARGUE THAT THERE'S POST-SALE CONFUSION, AND THAT'S REALLY ALL THAT THEY'RE LEFT WITH.

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BUT, NUMBER ONE, THAT IS NOT A THEORY THAT WAS ASSERTED TIMELY IN THIS CASE.
NUMBER TWO, YOUR HONOR, COURTS HAVE MADE VERY CLEAR THAT POST-SALE CONFUSION IS NOT PROPERLY AVAILABLE IN INSTANCES WHERE PRODUCT CONFIGURATION IS THE TRADE DRESS CLAIM, AND THAT MAKES SENSE, YOUR HONOR, BECAUSE OTHERWISE WHAT YOU'RE SAYING IS THAT A, A -- ONE COMPETITOR HAS AN EXCLUSIVE MONOPOLISTIC RIGHT TO THE APPEARANCE OF A PRODUCT FROM A DISTANCE, WHICH REALLY MAKES ABSOLUTELY NO SENSE UNLESS WHAT YOU'RE TALKING ABOUT ARE OUTRIGHT COUNTERFEITING CASES WHERE SOMETIMES COURTS HAVE RECOGNIZED AN EXCEPTION.
BUT THE COURT WILL RECALL THAT WE HAD EXTENSIVE BRIEFING ON THIS POINT, BUT PRODUCT CONFIGURATION, AS IT'S BEEN ARTICULATED BY THE SUPREME COURT AND THE NINTH CIRCUIT AND OTHER COURTS OF APPEALS, IS A RED FLAG BECAUSE IT IS DANGEROUS TO COMPETITION.
AND IT IS DANGEROUS TO COMPETITION BECAUSE COMPETITORS, IF THEY'RE ALLOWED TO MONOPOLIZE A PRODUCT FEATURE THAT HAS SOME UTILITARIAN ADVANTAGES, THAT CAN HARM COMPETITION.
AND IT DOES NOT ADVANCE THE PURPOSES OF THE LANHAM ACT IN DOING SO. THE LANHAM ACT IS

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SUPPOSED TO PROTECT SOURCE IDENTIFYING INFORMATION. IT DOES NOT PROTECT IDEAS. IT DOES NOT PROTECT CONCEPTS. IT DOES NOT PROTECT FUNCTIONAL OR UTILITARIAN PRODUCT ASPECTS.
AND THAT MEANS IN A VERY, VERY BROAD SENSE, BECAUSE, AGAIN, THE PURPOSE OF THE LANHAM ACT IS EXTREMELY LIMITED, AND IN THIS PARTICULAR INSTANCE, THE -- APPLE ACTUALLY MADE NO EFFORT TO SHOW THAT THESE FEATURES OF TRADE DRESS WERE NOT FUNCTIONAL.
LITERALLY THE ONLY THING THEY DID IS THEY HAD MR. STRINGER CLAIM IN COMPLETELY CONCLUSORY TERMS THEY'RE COMPLETELY AESTHETIC WHICH IS, A, FALSE AND NOT EVEN CONSISTENT WITH THE TESTIMONY OF MR. BRESSLER AND THE OTHER WITNESSES AND UTTERLY IMPLAUSIBLE, BUT IN NO WAY CAN IT AMOUNT TO THE SUBSTANTIAL EVIDENCE THAT THEY ARE REQUIRED ADDUCE ON THIS ELEMENT.
FURTHERMORE, YOUR HONOR, THERE'S NO EVIDENCE THAT THE TRADE DRESS, THE ACTUAL TRADE DRESS THAT'S BEING ASSERTED HERE, IS FAMOUS.
THE COURT IS AWARE THAT THEY HAVE COME UP WITH THIS CONSTRUCT, TO PUT IT KINDLY, THIS IMAGINARY CONSTRUCT OF WHAT THEY THINK THEIR TRADE DRESS IS.

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IT IGNORES, IN FACT, WELL-SETTLED LAW BECAUSE IT'S ACTUALLY THE OVERALL PRODUCT AS IT'S PRESENTED TO THE MARKETPLACE. THEY LITERALLY ARE X'ING OUT AND COVERING UP KEY ASPECTS OF THAT TRADE DRESS BECAUSE THEY, OF COURSE, KNOW THAT IF THEY INCLUDE THAT IN THERE, THE TRADE DRESS CLAIMS, OF COURSE, WOULD BE QUITE OBVIOUSLY FLAWED BECAUSE THESE ARE ELEMENTS THAT SAMSUNG DOES NOT EVEN ARGUE WERE USED.
BUT THERE IS NO EVIDENCE THAT THE GENERAL CONSUMING PUBLIC, AS REQUIRED FOR TRADE DRESS FAME, FOR DILUTION LEVEL FAME, IS RECOGNIZED WITHOUT SUCH FEATURES AS THE HOME BUTTON OR THE APPLE LOGO.
AND, IN FACT, THE ONLY SURVEY THAT WAS SUBMITTED IN THIS CASE, YOUR HONOR, THE COURT WILL RECALL, THE COURT HAS LIMITED TO ITS PROPER PURPOSE AS ONLY BEING EVIDENCE OF SECONDARY MEANING.
SECONDARY MEANING, OF COURSE, IS NOT EQUIVALENT TO FAME. FAME IS A MUCH, MUCH HIGHER STANDARD AND HAS TO REACH THAT HOUSEHOLD RECOGNITION AMONG THE ENTIRE CONSUMING PUBLIC OF THE UNITED STATES.
AND THERE IS SIMPLY NO EVIDENCE THAT WOULD ALLOW THAT BURDEN -- TO SHOW THAT THAT BURDEN HAS BEEN MET BY APPLE.

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I WOULD ALSO ADD, YOUR HONOR, THAT THERE'S NO EVIDENCE OF ANY KIND OF BLURRING IN THIS CASE. AS I MENTIONED EARLIER, DR. WINER ACTUALLY TESTIFIED TO THE OPPOSITE. HE MENTIONED, AND ACKNOWLEDGED, THAT EVEN AFTER ALL THIS TIME, THERE IS -- THERE'S NO INDICATION THAT APPLE HAS LOST ANY SALES, HAD ANY HARM TO ITS REPUTATION, OR OTHERWISE SUFFERED FROM ANY DILUTION AFTER ALL THIS TIME.
AND THAT, OF COURSE, IS AN ESSENTIAL ELEMENT. THIS LIKELIHOOD OF DILUTION BY BLURRING IS AN ESSENTIAL ELEMENT OF THE DILUTION CLAIMS AS WELL.
TO ELABORATE A BIT MORE ON THE DAMAGES FRONT, YOUR HONOR, AS I MENTIONED, AS A MATTER OF LAW, THESE ARE JUST NOT -- THE DAMAGES FOUNDATION THAT WAS ADDUCED HERE IS NOT SUFFICIENT. IT'S NOT SUFFICIENT FOR DISGORGEMENT OF PROFITS; IT'S NOT SUFFICIENT FOR APPLE LOST PROFITS; IT'S NOT SUFFICIENT FOR REASONABLE ROYALTY.
ONE THING I WOULD MENTION, YOUR HONOR, IS THAT THERE'S NO EVIDENCE OF CAUSATION. THERE'S NO EVIDENCE OF CAUSATION WITH RESPECT TO APPLE'S LOST SALES. THERE'S NO EVIDENCE THAT IT HAD -- HAD THERE BEEN -- WELL, ACTUALLY, LET ME TRY AND REPHRASE THIS IN ANOTHER WAY.

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THERE'S NO EVIDENCE THAT CONSUMERS WOULD NOT HAVE PURCHASED THE ALTERNATIVES IN THE MARKET, NON-INFRINGING ALTERNATIVES OR NON-ACCUSED ALTERNATIVES IN THE MARKET AS OPPOSED TO APPLE PRODUCTS.
THAT WAS NOT MENTIONED AT ALL IN THE ANALYSIS THAT YOU HEARD HERE TODAY.
IN ADDITION, THERE HAS BEEN NO APPORTIONMENT FOR PURPOSES OF TRADE DRESS. APPLE DOES BEAR THAT BURDEN. APPLE MUST SHOW WHAT AMOUNT OF THE TRADE DRESS PROFITS ARE ATTRIBUTABLE TO THE SO-CALLED INFRINGEMENT, AND PARTICULARLY HERE WHERE WE'RE TALKING ABOUT, AS APPLE IS CLAIMING, A LIMITED SET OF FEATURES THAT MAKE UP ITS TRADE DRESS.
IT'S NOT SUFFICIENT TO SIMPLY GO IN AND SAY, "WELL, WE THINK THAT YOU INFRINGE OUR TRADE DRESS BECAUSE OF PARTICULAR ASPECTS OF IT," HAVING A CLEAR FLAT SURFACE, FOR EXAMPLE, AND THEN JUST SAYING, "SO PRESUMPTIVELY WE GET ALL THE PROFITS THAT COME FROM THE SALE OF THOSE PRODUCTS."
AND APPLE HAS MADE NO EFFORT AT ALL TO APPORTION THOSE, NOR, UNDER THE DESIGN AND PATENT ACT OR THE DESIGN PATENT DAMAGES PROVISION, HAS APPLE MADE ANY EFFORT TO LIMIT THE PROFITS IT'S

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SEEKING TO THE ARTICLE TO WHICH THE DESIGN IS APPLIED.
THAT'S THE PLAIN LANGUAGE OF THAT STATUTE. THEY ARE ACTING -- THEY ARE ASSUMING THAT THE ARTICLE TO WHICH THE DESIGN IS APPLIED IS THE ENTIRE PRODUCT, WHICH IS ERRONEOUS AS A MATTER OF LAW.
THEY HAVE NOT FACTORED OUT, FOR EXAMPLE, THE TECHNOLOGY AND WHAT DRIVES THOSE PROFITS.
THEY ARE SIMPLY ASKING FOR ALL OF THEM, AND SO THAT'S INSUFFICIENT AS A MATTER OF LAW AS WELL.
AND I THINK I MENTIONED IT, BUT JUST TO BE CLEAR ON THIS, THEY HAVE ALSO FAILED TO SEPARATE OUT INFRINGING VERSUS NON-INFRINGING PRODUCTS, OR ACCUSED VERSUS NON-ACCUSED PRODUCTS.
THERE IS NO EVIDENCE FROM WHICH THE JURY CAN MAKE A DETERMINATION FOR DAMAGES ON A PRODUCT-BY-PRODUCT AND PATENT-BY-PATENT BASIS. THEY ARE LITERALLY JUST SIMPLY SAYING, "I'M ASSUMING THAT EVERYTHING IS INFRINGING AND THIS IS THE NUMBER THAT SHOULD BE AWARDED."
BUT THAT IS NOT SUFFICIENT FOR PURPOSES OF THE DAMAGES HERE.
ALSO, THERE IS -- THE DAMAGES ANALYSIS

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THAT WAS OFFERED HERE TODAY IS CONTRARY TO THE RECORD EVIDENCE AS WELL IN ANOTHER WAY, AND ALSO APPLE HAS FAILED TO PROVE THIS AS WELL, WHICH IS THE COURT KNOWS, OF COURSE, THAT THERE ARE NO DAMAGES PRIOR TO NOTICE, AND THE NOTICE THAT'S REQUIRED HERE HAS TO BE FOR THE SPECIFIC INTELLECTUAL PROPERTY AT ISSUE.
THE COURT HAS HEARD TESTIMONY THAT DURING THESE DISCUSSIONS, APPLE DID NOT CITE ANY SPECIFIC DESIGN PATENTS, NO SPECIFIC TRADE DRESS, AND SO
THERE WAS PREFILING ACTION.
THAT ALSO
NO NOTICE PRIOR TO THE TIME OF THE -- PRIOR TO THE FILING OF THIS, THIS
IN ADDITION, THERE'S BEEN NO MARKING. WAS ADMITTED HERE TODAY. IN OTHER WORDS, THERE'S NO EVIDENCE OF
ACTUAL NOTICE, OTHER THAN WITH RESPECT TO THE '381, AS TO ANY OF THE ASSERTED INTELLECTUAL PROPERTY IN THIS CASE. AND YOU HEARD THAT FROM MR. TEKSLER AS A MATTER OF FACT.
AND, YET, APPLE'S DAMAGES EXPERT WAS ESSENTIALLY ASKING FOR DAMAGES THAT FLY IN THE FACE OF THOSE UNDISPUTED FACTS.
IF I MAY, YOUR HONOR?

THE COURT: PLEASE, GO AHEAD. AND I'M

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GOING TO LET YOU HAVE THE REPLY AS WELL. (DISCUSSION OFF THE RECORD BETWEEN
DEFENSE COUNSEL.)

MR. ZELLER: THE ONLY OTHER THING, YOUR
HONOR, IS WE CAN PROVIDE MORE DETAIL ON THE UTILITY FRONT, BUT I THINK THE COURT SEES THE GIST OF OUR MOTION ON THAT.

THE COURT: I DO. I'M GOING TO GIVE YOU AN OPPORTUNITY TO REPLY, SO IF YOU THINK OF ANYTHING ELSE, PLEASE RAISE IT AT THAT TIME.
NOW, DOES ANYONE WANT TO RESPOND?

MR. MCELHINNY: THANK YOU, YOUR HONOR. FIRST OF ALL, OF COURSE, THE STANDARD FOR
A RULE 50 MOTION IS THAT -- IT CAN ONLY BE GRANTED IF NO REASONABLE JURY CAN FIND IN THE NON-MOVING PARTY'S FAVOR.
CONFLICTING INTERESTS HAVE TO BE DRAWN, CONFLICTING INFERENCES HAVE TO BE DRAWN IN OUR FAVOR AT THIS POINT IN THE CASE.
AT THE OVERALL LEVEL, OBVIOUSLY WE DISAGREE. WE THINK WE HAVE PROVIDED DETAILED, INCREDIBLY DETAILED EVIDENCE OF EACH OF OUR INFRINGEMENT CLAIMS ON A CLAIM-BY CLAIM BASIS.
I SAT HERE WHILE BOTH DR. BALAKRISHNAN AND DR. SINGH WENT THROUGH THE PATENT CLAIM

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LANGUAGE AND APPLIED IT TO THE ACCUSED DEVICES.

THE COURT: WHAT EVIDENCE HAVE YOU
PROVIDED THAT ACE AND SOME OF THE OTHER SMARTPHONES WERE SOLD IN THE U.S.?

MR. MCELHINNY: ON THOSE THREE SPECIFIC PHONES, YOUR HONOR, THE EVIDENCE WAS THAT SAMSUNG'S WITNESS TESTIFIED THAT THEY WERE GLOBAL VERSIONS, SO IT'S -- THE REST OF THE VERSIONS THAT WE'RE TALKING ABOUT WERE DIRECTED TO THE UNITED STATES, BUT THE TESTIMONY IS THAT THOSE, THREE OF THOSE DEVICES WERE GLOBAL VERSIONS.

THE COURT: AND WHO WAS THAT, MR. DENISON, OR WHO WAS THAT?

MR. MCELHINNY: THAT WAS MR. DENISON WHO DESCRIBED THEM AS GLOBAL VERSIONS.
THE IMPLICATION IS THAT THEY WERE SOLD AROUND THE GLOBE, AND THAT WOULD INCLUDE THE UNITED STATES, AT LEAST THAT WOULD BE THE INFERENCE AT THIS POINT UNTIL SOMEBODY COMES IN AND SAYS THAT THEY WEREN'T ON THOSE THREE PARTICULAR PHONES.

THE COURT: WAS THE GEM JX 1021 ONE OF YOUR '381 PATENT SLIDES? I THINK THAT IT WAS. I RECALL IT WAS, BUT --

MR. MCELHINNY: IT WAS, YOUR HONOR.

THE COURT: WHAT'S YOUR EVIDENCE OF

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ACTIVE INDUCEMENT BY SEC?

MR. MCELHINNY: ON ACTIVE INDUCEMENT, THE
TESTIMONY, AT LEAST TO DATE, IS THAT SEC SELLS PHONES DIRECTLY -- WELL, FIRST OF ALL, WHAT WE GOT THIS MORNING WERE THE ADMISSIONS THAT SEC WAS AWARE OF THE PATENTS. THEY KNEW ABOUT THE UTILITY PATENTS. THEY KNEW ABOUT THE DESIGN PATENTS. THEY CHOSE -- THE TESTIMONY IS THEY CHOSE NOT TO PAY ANY ATTENTION TO THE DESIGN PATENTS BECAUSE THEY THOUGHT THEIR PHONES DIDN'T LOOK THE SAME. BUT THE TESTIMONY WAS THAT THEY WERE AWARE OF THE DESIGN ISSUES.
THERE WAS TESTIMONY ALSO FROM THE LICENSING PERSON THAT THE DESIGN ISSUES HAD BEEN SPECIFICALLY RAISED BY APPLE DURING THE INITIAL CONVERSATIONS.
WE KNOW THAT SEC MANUFACTURES THE PHONES. WE KNOW THAT SEC CONTROLS THE DESIGN OF THE PHONES. WE KNOW THAT SEC COPIED.
SO THEY MADE THE INTERNAL CORPORATE DECISIONS THAT THE PHONES THEY SOLD WOULD BE KNOCK-OFFS OF THE APPLE PRODUCTS THAT THEY WERE SELLING.
WE KNOW THAT SEC CONTROLS THE PRICE AT WHICH THEY'RE SOLD, CONTROLS THE PRICE AT WHICH

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THEY'RE SOLD TO CARRIERS. AND IN ADDITION TO THAT, DIRECTS ITS
SUBSIDIARIES IN THE UNITED STATES TO SELL THESE INFRINGING PRODUCTS, WE WOULD SAY KNOWING, BUT CERTAINLY WILLFULLY BLINDLY OF THE FACT THAT THEIR SALES INFRINGE APPLE'S PATENT.

THE COURT: WHAT'S YOUR RESPONSE TO FAME BEING A HIGHER STANDARD THAN SECONDARY MEANING?

MR. MCELHINNY: WE THINK -- WE THINK THAT WE HAVE PROVED FAME. THE EVIDENCE THAT WENT IN TO SHOW FAME WERE THE DOCUMENTS, INCLUDING SAMSUNG'S OWN DOCUMENTS. WE JUST LOOKED AT ONE THAT WAS -- I MEAN, WE JUST GOT THROUGH LOOKING AT A DOCUMENT THAT WAS DATED NOVEMBER OF 2007 TALKING ABOUT THE INFLUENCES THAT THE IPHONE WOULD HAVE, HOW IT WOULD CHANGE THE NATURE OF THE SMARTPHONE MARKET, INCLUDING BY ITS BEAUTIFUL DESIGN.
SO SAMSUNG'S OWN -- AND THAT WAS JUST ONE OF THE DOCUMENTS. SO WE HAVE A NUMBER OF SAMSUNG DOCUMENTS.
IF YOU REMEMBER BACK TO THAT GRAVITY TANK SURVEY THAT THEY DID OF THE POPULATION, THAT SHOWED IT WAS A REVOLUTIONARY DESIGN, THAT PEOPLE IMMEDIATELY IDENTIFIED IT, THAT THEY WERE BUYING IT. WE HAVE THE WORDS "THE WOW EFFECT" THAT WAS

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INTRODUCED BY SAMSUNG -- BY APPLE. ALL OF THESE DESIGNS, ALL OF WHICH
SAMSUNG'S EVIDENCE, NOT OURS, BUT SAMSUNG'S EVIDENCE ATTRIBUTED DIRECTLY.
WE HAVE THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF SAMSUNG SAYING THAT THE IPHONE ESTABLISHED THE STANDARD FOR HOW SMARTPHONES HAD TO BE DESIGNED IN THE UNITED STATES. THAT'S SIMPLY ADMISSIONS.
IN ADDITION TO THAT, WE HAVE PUT IN, OBVIOUSLY TO THE EXTENT WE WERE PERMITTED TO, WE PUT IN THE AMOUNT OF ADVERTISING THAT APPLE HAD PUT IN.
MR. SCHILLER TESTIFIED AT GREAT LENGTH ABOUT WHAT IS UNIQUE ABOUT APPLE'S ADVERTISING IS THIS "PRODUCT AS HERO" APPROACH IN WHICH THE ADVERTISING, BY AND LARGE, IS DIRECTED TO THE TRADE DRESS, THE PHYSICAL DESIGNS, THE BEAUTY OF THE PRODUCTS ITSELF.
WE THEN ALSO HAVE A LARGE NUMBER OF ARTICLES, REFERENCES TO MOVIES, REFERENCES TO TELEVISION SHOWS, ALL OF WHICH MAKE THE APPLE PRODUCT IMMEDIATELY IDENTIFIABLE.

THE COURT: WHAT'S YOUR RESPONSE TO NO ALLOCATION IN THE DAMAGES BETWEEN ALLEGEDLY

MR. MCELHINNY: I BELIEVE THE ONLY EVIDENCE, THE ONLY CONTRARY EVIDENCE IN THE RECORD THAT I HEARD -- AND YOUR HONOR OBVIOUSLY IS THE JUDGE OF THIS, YOUR HONOR OBVIOUSLY IS THE JUDGE -- BUT THE ONLY EVIDENCE I HEARD WAS MR. PRICE'S QUESTION.
WE JUST LISTENED TO MR. MUSIKA GO THROUGH HIS SUMMARY AND POINT OUT THAT, AT A MINIMUM, ON THE LAST PAGE A ROYALTY NUMBER IS BROKEN OUT FOR EACH INDIVIDUAL PATENT.
IN ADDITION, THERE'S A CHART THAT SETS OUT BY QUARTER, SO IF THERE'S ANY QUESTION ABOUT WHEN INFRINGEMENT BEGAN, THE JURY CAN DETERMINE BY QUARTER WHAT THE NUMBER OF ACCUSED DEVICES, OR INFRINGING DEVICES WOULD BE, AND IT'S A MATTER OF MULTIPLYING THAT AMOUNT AGAINST THE INDIVIDUAL ROYALTY IN THE BACKGROUND FOR THE CALCULATION OF THE ROYALTY THAT HAS BEEN MADE IN EVERY SINGLE CASE.
SO MR. MUSIKA'S REPORT IS, AS HE DESCRIBED IT, A MATRIX THAT WOULD PERMIT THE JURY TO COME TO -- TO CALCULATE ANY OF THE THOUSANDS OF PERMUTATIONS OR -- THAT, IN THEORY ARE POSSIBLE

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HERE DEPENDING ON THE INDIVIDUAL PHONE AND THE PATENT AND THE INDIVIDUAL NUMBERS ARE BROKEN OUT IN EVERY CASE.

THE COURT: WHAT'S YOUR RESPONSE TO THE FACT THAT THERE'S, THERE'S THE ASSERTION THAT THERE'S NO NOTICE OF THE TRADE DRESS OR DESIGN PATENTS IN THAT AUGUST 4TH, 2010 MEETING UNTIL THIS LAWSUIT WAS FILED AND UNTIL THE AMENDMENT IN THE SUMMER OF 2011?

MR. MCELHINNY: THE -- THE QUESTION, YOU KNOW -- WELL, FIRST OF ALL, WE KNOW AS A MATTER OF LAW THAT ACTUAL NOTICE DOES NOT REQUIRE THE SPECIFIC NAMING OF PRODUCTS THAT ARE ACCUSED.
WE ALSO KNOW THAT, UNDER -- FIRST OF ALL, THE COURTS HAVE TOLD US, THE SUPREME COURT HAS TOLD US THAT THE QUESTION OF NOTICE IS A FACT INTENSIVE DETERMINATION THAT TURNS ON THE PARTICULAR FACTS OF EVERY CASE.
WE KNOW THAT THE SPECIFIC PATENT NUMBERS ARE NOT REQUIRED IN ORDER TO GIVE ACTUAL NOTICE. THAT'S THE CHICO MANUFACTURING COMPANY, 817 F.SUPP 979.
WE ALSO KNOW THAT IN THE CASE OF ONGOING RELATIONSHIPS BETWEEN PARTIES THAT ARE IN A CONTRACTUAL RELATIONSHIP, THE NOTICE REQUIREMENTS

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ARE REDUCED. SO THAT'S THE BACKGROUND.
BUT WE HAVE MR. TEKSLER'S TESTIMONY AND WE HAVE HIS -- WELL, WE HAVE -- WE HAVE IT FROM BOTH SIDES, YOUR HONOR.
WE PRODUCED MR. TEKSLER, WHO TESTIFIED ABOUT THE DOCUMENT THAT HE PREPARED. HE HAS NOT YET -- BECAUSE OF THE WAY THE CASE HAS BEEN DIVIDED UP, THIS IS PART OF THAT SEPARATION -- HE'S NOT YET BEEN PERMITTED TO TESTIFY ABOUT WHAT HAPPENED AT ANYTHING OTHER THAN THE FIRST MEETING.
BUT HE WAS PERMITTED TO TESTIFY ABOUT THE DOCUMENT THAT WAS USED AT THE FIRST MEETING. HE POINTED OUT THAT THERE WAS AN INTENTIONAL CHAPTER TO THE BACKGROUND OF THE DISCUSSION OF THE DESIGN AND TRADE DRESS ISSUES THAT SHOWED THE PHONES NEXT TO EACH OTHER.
AND THEN WE HAVE THE TESTIMONY FROM MR., I WANT TO SAY LEE, THE FIRST PERSON I PLAYED TODAY, WHO WAS ON THE OTHER SIDE OF THOSE DISCUSSIONS WHO TESTIFIED THAT HE WAS THERE, THAT SAMSUNG -- THAT APPLE DID ACCUSE SAMSUNG BOTH OF INFRINGEMENT OF UTILITY PATENTS, BUT ALSO OF COPYING THE DESIGNS OF THEIR PRODUCTS.
AND HE TESTIFIED THAT THAT SPECIFICALLY

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HAPPENED, THAT SAMSUNG LISTENED, BUT IT CHOSE NOT TO DO ANYTHING ABOUT THAT.
SO I -- ACTUAL NOTICE IS, I THINK -- ONE, IT'S GOING TO BE SUBJECT TO HOW YOUR HONOR SPECIFICALLY INSTRUCTS THE JURY ULTIMATELY, BUT THE FACTS RIGHT NOW CERTAINLY WOULD SUPPORT A VERDICT IN OUR FAVOR THAT SAMSUNG HAD ABSOLUTE NOTICE GIVEN THOSE FIRST MEETINGS AND THE DOCUMENTS THAT WERE EXCHANGED.

THE COURT: ALL RIGHT. MR. ZELLER, WHAT WOULD YOU -- I DON'T AGREE WITH YOU THAT THE GORHAM TEST REQUIRES DECEPTION AT THE TIME OF PURCHASING. I DON'T THINK THAT'S WHAT THE LAW IS.
IF I DISAGREE WITH YOU ON THAT, THEN PERSUADE ME WHY A REASONABLE JURY WOULDN'T HAVE A LEGALLY SUFFICIENT EVIDENTIARY BASIS TO FIND FOR APPLE.

MR. ZELLER: MAYBE LET ME CLARIFY ONE THING, YOUR HONOR. I DIDN'T SAY AT THE POINT OR TIME OF THE PURCHASE. IT'S IN THE PURCHASING CONTEXT. THE GORHAM STANDARD DOES SAY THAT THE DECEPTION HAS TO BE IN THE PURCHASING CONTEXT SUCH THAT THE ORDINARY OBSERVER THINKS THAT HE OR SHE IS PURCHASING THE DESIGN THINKING IT'S THE OTHER.

THE COURT: WELL, I GUESS I JUST DON'T

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AGREE THAT THAT'S WHAT THE LAW REQUIRES, THAT A PERSON ACTUALLY BE DECEIVED AT THE POINT OF PURCHASE INTO THINKING THAT THEY ARE BUYING AN ALLEGEDLY INFRINGING PRODUCT.

MR. ZELLER: I'M NOT --

THE COURT: I DON'T THINK THAT'S THE LAW AND I DON'T INTEND TO INSTRUCT THE JURY THAT THAT'S THE LAW.
SO IF I DON'T AGREE WITH YOU ON THAT POINT OF THE LAW, PERSUADE ME WHY OTHERWISE THERE'S NOT A LEGALLY SUFFICIENT EVIDENTIARY BASIS FOR A JURY TO RULE IN APPLE'S FAVOR.

MR. ZELLER: WELL, I THINK THE SHORT ANSWER IS I'M NOT TRYING TO PERSUADE YOU THAT THAT'S NOT THE LAW.
I THINK WHAT I'M SAYING, YOUR HONOR -- AND BEAR WITH ME AND I WILL GET THE EXACT LANGUAGE -- BUT WHAT IT SAYS IS -- THIS IS THE GORHAM TEST VERBATIM, "IF, IN THE EYE OF AN ORDINARY OBSERVER, GIVING SUCH ATTENTION AS A PURCHASER USUALLY GIVES TO DESIGNS, ARE SUBSTANTIALLY THE SAME, IF THE RESEMBLANCE IS SUCH AS TO DECEIVE SUCH AN OBSERVER, INDUCING HIM TO PURCHASE ONE SUPPOSING IT TO BE THE OTHER, THE FIRST ONE PATENTED IS INFRINGED BY THE OTHER."

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THAT'S WHAT I REFER TO WHEN I TALK ABOUT PURCHASING.

THE COURT: I HEAR YOU, AND I THINK THERE IS LAW THAT SAYS THAT.
BUT I THINK ALL THE SUBSEQUENT LAW SAYS THAT THAT'S NOT THE TEST -- THE TEST IS NOT THAT HIGH, THAT YOU ACTUALLY HAVE TO BE DECEIVED AT THE TIME OF YOUR PURCHASING, THAT YOU HAVE TO BE DECEIVED. I DON'T THINK THAT'S THE LAW.
BUT ANYWAY, LET ME GIVE YOU AN OPPORTUNITY TO RESPOND TO ANYTHING YOU WANT AS TO WHAT MR. MCELHINNY STATED, AND IF YOU WANT TO MAKE ANY OTHER NEW POINTS, TO DO SO.

MR. ZELLER: YOUR HONOR, I WOULD JUST TO THIS POINT, BECAUSE IT'S OBVIOUSLY AN IMPORTANT ONE FROM OUR PERSPECTIVE. THIS IS ALSO THE EXACT VERBATIM LANGUAGE THAT THE FEDERAL CIRCUIT USED IN EGYPTIAN GODDESS, WHICH IS THE LAST EN BANC DECISION BY THE FEDERAL CIRCUIT ON DESIGN PATENTS.
IT SPECIFICALLY QUOTED THAT SAME LANGUAGE THAT I HAVE JUST QUOTED.
THE COURT ALSO IS AWARE THAT EVEN -- THAT WAS THE STANDARD THAT THIS COURT APPLIED, THIS EXACT LANGUAGE THIS COURT APPLIED ON THE PRELIMINARY INJUNCTION, AS WELL AS MOST RECENTLY IN

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ITS ORDER ON CLAIM CONSTRUCTION. SO I, I APOLOGIZE IF I'M -- IF WE'RE
TALKING PAST EACH OTHER OR IF I'M MISUNDERSTANDING YOU.
BUT WHAT WE'RE ADVOCATING SIMPLY IS THAT THIS GORHAM TEST, THE LANGUAGE THAT I DESCRIBED WHICH WE THINK IS A BINDING LAW --

THE COURT: OH, I REMEMBER WE HAD CONVERSATIONS ABOUT THIS VERY LAW AT THE
PRELIMINARY INJUNCTION HEARING BACK IN OCTOBER. I HEAR YOU, BUT I DON'T THINK THE TEST IS
ACTUAL DECEPTION IS WHAT I'M TRYING TO SAY. I DON'T THINK THAT'S THE REQUIREMENT.

MR. ZELLER: AND I THINK WE AGREE ON THAT. WE'RE NOT SAYING THAT APPLE HAS TO ADDUCE EVIDENCE OF BUYERS WHO HAVE BEEN ACTUALLY DECEIVED.
NOW, WE DO THINK THAT THAT'S A RELEVANT PIECE OF EVIDENCE.

THE COURT: SURE, YEAH.

MR. ZELLER: THE FEDERAL CIRCUIT HAS CERTAINLY CONSIDERED THAT.
BUT I WANT TO BE VERY CLEAR, YOUR HONOR, BECAUSE WE ARE NOT ADVOCATING THAT THEY NEED TO PROVE ACTUAL CONFUSION, FOR EXAMPLE, OR ACTUAL DECEPTION.

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BUT THE LACK OF IT IN THE REAL WORLD IS CERTAINLY A PERTINENT CONSIDERATION.
BUT REALLY, TO THEN GO A STEP FURTHER, YOUR HONOR, TO PERHAPS PERSUADE YOU ON THIS POINT, WHAT OUR POINT IS ON THE RULE 50 MOTION IS THAT APPLE'S OWN EXPERTS, WHEN THEY CAME IN, DID NOT APPLY THIS STANDARD. THEY DIDN'T APPLY THE, THE GORHAM DECEPTION STANDARD.
JUDGE KARE -- EXCUSE ME -- DR. KARE, FOR EXAMPLE, SAID ESSENTIALLY THAT SHE JUST THOUGHT THAT THE OVERALL APPEARANCE WAS SIMILAR. SHE NEVER UTTERED THE WORDS -- SHE NEVER TALKED ABOUT EVEN APPLYING THE GORHAM STANDARD.
MR. BRESSLER, IN FACT, EVEN WENT FURTHER. MR. BRESSLER ACKNOWLEDGED THAT HE DID NOT APPLY DECEPTIVE SIMILARITY AS THE STANDARD. HE SAID HE WAS INSTRUCTED BY COUNSEL THAT THAT WAS NOT NECESSARY.
AND SO OUR POINT IS THAT UNDER THAT STANDARD ADOPTED BY THIS COURT, THE FEDERAL CIRCUIT, THE SUPREME COURT, THEIR OWN EXPERTS FAILED TO APPLY IT AND THAT IS WHY WE'RE MOVING ON THAT GROUND.

THE COURT: OKAY. IS THERE ANYTHING ELSE THAT MR. MCELHINNY SAID THAT YOU WOULD LIKE TO

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ADDRESS OR ANY OTHER BASIS FOR A RULE 50 MOTION THAT YOU WANT TO STATE?
ORDER.

MR. ZELLER: YES, YOUR HONOR. WITH RESPECT TO -- I'LL JUST TAKE THEM IN

THE COURT: OKAY.

MR. ZELLER: WITH RESPECT TO THE GALAXY ACE, THE GALAXY S I9000, AND THE GALAXY S II I9100, MR. DENISON ACTUALLY TESTIFIED TO THE OPPOSITE OF WHAT APPLE'S COUNSEL SAID.
MR. DENISON SPECIFICALLY TESTIFIED THAT THOSE MODELS WERE NOT SOLD IN THE UNITED STATES. AND I BELIEVE THIS IS THE CITATION FOR
IT, I'LL HAVE TO DOUBLE CHECK, BUT I BELIEVE YOU'LL FIND IT AT PAGES 947 THROUGH 948 AND 961 OF AT LEAST ONE VERSION OF THE TRANSCRIPT.

THE COURT: LET ME SEE THAT, PLEASE. WHO
HAS THAT?
AND WHAT'S YOUR RESPONSE TO THAT, MR. MCELHINNY?

MR. MCELHINNY: MY RECOLLECTION, I BELIEVE THAT MR. DENISON SAID THOSE PRODUCTS WERE NOT SOLD IN THE UNITED STATES BY STA, YOUR HONOR.

MR. VERHOEVEN: WE'VE GOT IT HERE, YOUR HONOR. WE'LL GET IT.

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THE COURT: OKAY. THANK YOU.

MR. VERHOEVEN: WHAT'S THE PAGE NUMBER, MR. ZELLER?

THE COURT: 947 TO 961.

MR. ZELLER: 947, 948, AND 961.

THE COURT: SO, MR. MCELHINNY, WHO DID HE
SAY SOLD THEM, THEN?

MR. MCELHINNY: HE SAID THEY WERE THE
GLOBAL VERSION, YOUR HONOR, AND HE SAID THAT HIS PARTICULAR COMPANY DIDN'T SELL THEM. THAT'S WHAT THE EVIDENCE IS, I BELIEVE.

THE COURT: CAN I SEE THE TRANSCRIPT, PLEASE? JUST HAND THAT TO MR. RIVERA.

MR. MCELHINNY: THIS IS MY COPY, YOUR HONOR. I HAVEN'T HAD A CHANCE TO CHECK THIS. I'M JUST GIVING YOU MY COPY OF THE TRANSCRIPT.

THE COURT: IT DOESN'T HAVE ANY NOTES ON IT, DOES IT?
DOESN'T.

MR. MCELHINNY: NO, YOUR HONOR, IT

THE COURT: ALL RIGHT.

(PAUSE IN PROCEEDINGS.)

MR. ZELLER: AND THE OPERATIVE PART OF
THIS, YOUR HONOR, THE CONTEXT BEGINS ON PAGE 947, LINE 6, AND HERE HE'S TALKING ABOUT CERTAIN PHONES.

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AND THEN THE MEAT OF THE TESTIMONY BEGINS AT 947, LINE 25 THROUGH 948, LINE 13.
AND HE ACTUALLY ANSWERED A BROADER QUESTION THAN APPLE'S COUNSEL HAS ASSERTED. IN TALKING ABOUT THAT, HE SAYS -- HE'S POINTING TO THE -- COUNSEL IS POINTING HIM TO THESE PARTICULAR THREE PHONES, AND HE SAYS, "THESE ARE THE LAST THREE REMAINING PHONES AT ISSUE BASED ON MY UNDERSTANDING. THESE ARE GLOBAL, GLOBAL DEVICES.
"QUESTION: ARE ANY OF THESE PHONES SOLD BY ANY SAMSUNG ENTITY IN THE UNITED STATES?
"ANSWER: NO, THEY'RE NOT."
AND, OF COURSE, EVEN IF IT WERE ONLY ONE ENTITY, YOUR HONOR, WE'D STILL BE ENTITLED TO JUDGMENT AS TO THAT ENTITY.

THE COURT: ALL RIGHT. MR. MCELHINNY, WHAT'S YOUR RESPONSE?

MR. MCELHINNY: MAY I POINT OUT THAT THAT -- THAT'S DELFIG, YOUR HONOR. THE QUOTE IS DELFIG.
WHAT HE TESTIFIED WAS THEY WERE NOT SOLD BY SAMSUNG ENTITIES IN THE UNITED STATES. "IN THE UNITED STATES" REFERS TO STA AND SEA, YOUR HONOR.

MR. ZELLER: THE QUESTION WAS, "ARE ANY OF THESE PHONES SOLD BY ANY SAMSUNG ENTITY IN THE

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UNITED STATES? "ANSWER: NO, THEY'RE NOT.

MR. MCELHINNY: WHICH LEAVES OPEN THE POSSIBILITY THAT THEY'RE GLOBAL SOLD DIRECTLY BY SEC.

MR. ZELLER: I WOULD ALSO JUST POINT OUT, OF COURSE, THAT RULE 50 REQUIRES APPLE TO PUT IN EVIDENCE, NOT POSSIBILITY AT THIS POINT.
THEY'VE FAILED TO PROVE THAT ANY OF THE NAMED DEFENDANTS IN THIS CASE SOLD ANY OF THESE TELEPHONES AND THESE MOBILE PHONES IN THE UNITED STATES.
THAT'S OBVIOUSLY A PREDICATE FOR INFRINGEMENT, DAMAGES. AND THIS IS THE SUM TOTAL OF THE EVIDENCE ON THAT ISSUE.

(PAUSE IN PROCEEDINGS.)

THE COURT: WHAT'S YOUR UNDERSTANDING OF WHAT "GLOBAL" MEANS?

MR. ZELLER: I THINK HE'S JUST SIMPLY SAYING THAT THEY'RE SOLD IN MORE THAN ONE MARKET.
BUT HE'S ALSO SAYING THEY'RE NOT SOLD IN THE UNITED STATES. IT'S -- IN OTHER WORDS, IT'S -- "GLOBAL" MEANS NOT THE UNITED STATES. THAT'S THE POINT OF IT.

THE COURT: DOES THAT MEAN SEC IS SELLING

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THEM IN KOREA TO THE CARRIERS?

MR. ZELLER: NO, IT DOES NOT, YOUR HONOR. IT MEANS THAT THEY'RE NOT BEING SOLD FOR
THE U.S. MARKET. THEY'RE NOT DESIGNED FOR THE U.S. MARKET. THEY'RE NOT BEING SOLD HERE.
AND IF THEY WERE, YOUR HONOR, APPLE WOULD BE ABLE TO PUT IN EVIDENCE FROM CARRIER SALES OR ANY OTHER NUMBER OF SOURCES SHOWING THAT THEY WERE SOLD, AND WE ARE AT THE CONCLUSION, APPLE HAS RESTED, AND IT DID NOT PUT IN EVIDENCE ON THOSE PHONES.

MR. MCELHINNY: AND TO BE CLEAR, YOUR HONOR, EVEN IF YOU GAVE US A CHANCE TO REOPEN, WE WOULD NOT CALL MR. ZELLER TO BE THE WITNESS ON THIS ISSUE. BUT WE HAVE --

THE COURT: WELL, I GUESS -- THIS IS MY SO THE FIRST QUESTION IS, "ALL RIGHT.
THE PHONES THAT ARE AT ISSUE IN THE CASE. "ANSWER: YES. "QUESTION: WHEN YOU SAY 'MAPPED OUT BY WHAT DO YOU MEAN BY THAT?
"ANSWER: I JUST MEAN THAT, YOU KNOW, FOR
QUESTION. THESE ARE
CARRIER,'
INSTANCE, NEXT TO AT&T, THAT PHONE IS SOLD FROM STA TO AT&T AND NOT TO ANY OTHER CARRIER. SO THAT'S TRUE OF
THE GALAXY S CAPTIVATE, WHICH IS RIGHT

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ALL OF THESE. "QUESTION: WE'VE TAKEN A LOOK AT THOSE
PHONES, BUT FIRST I'D LIKE TO TURN TO THE NEXT DEMONSTRATIVE EXHIBIT."
WHAT'S 3585?

MR. ZELLER: IF WE CAN PULL THAT UP, PLEASE, 3585.

THE COURT: I HAVE IT RIGHT HERE.

MR. ZELLER: WE HAVE IT ON THE SCREEN, YOUR HONOR.

THE COURT: OKAY.

MR. ZELLER: SO THIS IS, FOR THE RECORD, SDX 3585. AND IT HAS THESE THREE BULLET POINTS, THE THREE PHONES THAT WE'VE BEEN TALKING ABOUT, THE GALAXY S I9000, GALAXY ACE, AND GALAXY S II I9100.

(PAUSE IN PROCEEDINGS.)

THE COURT: ALL RIGHT. WHAT ELSE DO YOU HAVE, MR. ZELLER?

MR. ZELLER: THEN WITH RESPECT TO THE -- ANOTHER ISSUE THAT HAS BEEN RAISED WHICH PERTAINS TO THE GEM, AND APPLE'S COUNSEL REPRESENTED THEY WERE DISCLOSED IN CONNECTION WITH THE LOCAL RULE 3-1 DISCLOSURES. THAT'S NOT CORRECT.
AND, IN FACT, IN THE ROW IDENTIFYING THE CLAIMS THAT APPLE ACCUSED THE GEM OF INFRINGING, IT

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LISTED N/A FOR THE '381 PATENT. AT NO TIME DID APPLE MOVE TO -- FOR LEAVE TO AMEND ITS INFRINGEMENT CONTENTIONS FOR THE GEM AS REQUIRED BY THE LOCAL RULES.

THE COURT: I DON'T REALLY THINK THAT'S A RULE 50 ARGUMENT. IF YOU WANTED TO EXCLUDE THIS, THIS REALLY SHOULD HAVE BEEN AN OBJECTION TO ANY SPECIFIC EVIDENCE. YOU GOT ALL THEIR DEMONSTRATIVES AND ALL THEIR EXHIBITS.

MR. ZELLER: WE DID OBJECT, YOUR HONOR.

THE COURT: WELL, I OVERRULED IT, SO I DON'T THINK THAT'S A BASIS FOR A RULE 50.
BUT GO ON, PLEASE.

MR. ZELLER: AND THEN WITH RESPECT TO THE POINTS ABOUT FAME, YOUR HONOR, THE ONLY EVIDENCE THAT APPLE'S COUNSEL POINTED TO DOES NOT ADDRESS THE KEY POINT, WHICH IS CONSUMER RECOGNITION.
THE NINTH CIRCUIT HAS BEEN VERY CLEAR THAT THE STANDARD IS A VERY HIGH ONE, AND IT HAS TO BE THAT THE GENERAL CONSUMING PUBLIC RECOGNIZES THE TRADEMARK OR TRADE DRESS. IT HAS TO BE A HOUSEHOLD NAME.
THE KINDS OF DOCUMENTS THAT APPLE'S COUNSEL HAS POINTED TO ARE DOCUMENTS BY ENGINEERS EXTOLLING THE ALLEGED VIRTUES OF CERTAIN FEATURES

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OR SAYING THAT THE IPHONE HAS INFLUENCE. THOSE ARE NOT STATEMENTS DIRECTED TO
WHETHER OR NOT THERE IS U.S. CONSUMER RECOGNITION THAT IS SUFFICIENTLY HIGH TO CONSTITUTE FAME, LET ALONE FOR THE KIND OF --

THE COURT: THAT ONE I THINK IS A WEAKER ARGUMENT BASED ON EVEN THE DEPOSITION THAT CAME IN TODAY ABOUT THE ADVERTISEMENTS BEING CONFUSED.

MR. ZELLER: UM-HUM.

THE COURT: THAT THEY THOUGHT A SAMSUNG TABLET ADVERTISEMENT WAS AN IPAD ADVERTISEMENT. THAT WAS A SAMSUNG WITNESS. I'M LESS PERSUADED BY THAT POINT.

MR. ZELLER: IF I COULD ADDRESS THAT SPECIFIC ARGUMENT, YOUR HONOR?

THE COURT: YEAH, AND THE BEST BUY ARGUMENT. ANYWAY, I THINK THAT'S A WEAKER POINT.
I THINK YOU HAVE A STRONGER POINT ON THE ACE AND THE I9000 AND THE I9100, BUT GO AHEAD.

MR. ZELLER: IF I COULD ADDRESS THOSE TWO DOCUMENTS BRIEFLY, YOUR HONOR?

THE COURT: YEAH.

MR. ZELLER: THE DEEP DIVE DOCUMENT THAT WAS ACTUALLY DISCUSSED TODAY IS ABOUT THE TAB 7.0. IT'S NOT AN ACCUSED DEVICE. THE COURT WILL RECALL

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THAT THAT'S THE ONE THAT A LIMITING INSTRUCTION HAS BEEN GIVEN ON. IT CAN'T BE USED FOR THE TRUTH OF THE MATTER ASSERTED TO EVEN SHOW CONFUSION. IT'S ONLY FOR WILLFULNESS OR KNOWLEDGE.
AND ALSO, I WOULD SUBMIT THAT THAT IS -- THAT THAT STUDY DOES NOT SHOW THAT THE TRADE DRESS THAT'S BEING ASSERTED HERE IS FAMOUS BECAUSE, AGAIN, YOUR HONOR, APPLE IS NOT ASSERTING, TAKE A LOOK AT OUR PRODUCT OVERALL AND IT'S FAMOUS.
WE WOULD PROBABLY HAVE A VERY, VERY DIFFERENT DISCUSSION IF THAT'S WHAT APPLE WAS ACTUALLY ASSERTING.
BUT APPLE HAS TAKEN THIS, THIS KIND OF SELF-SERVING DEFINITION OF WHAT IT CLAIMS ITS TRADE DRESS IS IN ORDER TO MAKE IT CLOSER TO SAMSUNG SO IT CAN MAKE INFRINGEMENT AND DILUTION ARGUMENTS.

THE COURT: I HEAR YOU, BUT THIS IS JUST LEGAL SUFFICIENCY OF EVIDENCE, AND I THINK THAT HAS BEEN MET. SO I DON'T WANT TO WASTE A LOT OF TIME ON THIS PARTICULAR ISSUE IF WE CAN.

MR. ZELLER: I UNDERSTAND. THANK YOU, YOUR HONOR.
THE NEXT POINT, THEN, IS TALKING ABOUT THE, THE DAMAGES.
AND ONE THING, YOUR HONOR, IF I HAVEN'T

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MADE THIS CLEAR, IS WE ARE -- WE'RE ALSO MOVING ON THE SAME GROUNDS AGAINST THE DAMAGES THEORIES AS WE DID ON THE DAUBERT. I DON'T NEED TO POINT -- I DON'T NEED, AT THIS POINT, TO ELABORATE FURTHER ON IT. I THINK THAT WOULD BE ENOUGH.
BUT ONE THING I WOULD SAY IS THAT -- SPECIFICALLY IS THAT THERE'S STILL NO SHOWING THAT THIS -- THAT THE JURY HAS SUFFICIENT INFORMATION TO DETERMINE DAMAGES ON A PRODUCT-BY-PRODUCT BASIS, AND THAT'S REALLY WHAT'S REQUIRED HERE.
ALL APPLE'S COUNSEL SAID IS, "WELL, THEY CAN DETERMINE IT PATENT-BY-PATENT."
BUT THAT STILL IS NOT SUFFICIENT.
IT IS APPLE'S BURDEN TO PROVE THAT EVERY DEVICE THEY'VE ACCUSED OF INFRINGING, THAT EVERY SINGLE ONE, IN FACT, INFRINGES IT.
AND TO SIMPLY SAY THAT THEY CAN FIND THAT ONE ACCUSED DEVICE INFRINGES THE '381, FOR EXAMPLE, AND THEREFORE THEY CAN SIMPLY AWARD DAMAGES, OR GIVE THAT KIND OF DAMAGES NUMBER THAT THEIR EXPERT WAS TESTIFYING TO IS NOT SUFFICIENT.
THEY MADE NO EFFORT TO BREAK THIS DOWN ON A PRODUCT-BY-PRODUCT BASIS AND THAT'S WHAT THEY'RE REQUIRED TO DO.
DAMAGES ARE NOT A LOTTERY. THEY AREN'T

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JUST ALLOWED TO COME IN HERE AND SAY, "WELL, IF YOU FIND THE '381 IS INFRINGED, GIVE US, YOU KNOW, X HUNDRED MILLIONS OF DOLLARS."
IT HAS TO BE BROKEN DOWN ON A PRODUCT-BY-PRODUCT AND PATENT-BY-PATENT BASIS, AND THAT'S WHERE WE THINK THESE DAMAGES CALCULATIONS, IN DIRECT RESPONSE TO APPLE'S COUNSEL'S STATEMENT, FAIL.
WE THINK THEY FAIL IN A VARIETY OF OTHER WAYS THAT WERE NOT ADDRESSED BY APPLE. BUT WE JUST DON'T THINK THAT EVEN PATENT-BY-PATENT IS SUFFICIENT UNDER THE LAW.
THEN WITH RESPECT TO THE NOTICE ARGUMENT, THE -- NUMBER ONE, APPLE'S COUNSEL ACTUALLY MISSTATED THE LAW. THE LAW IS EXACTLY THE OPPOSITE. THE LAW SPECIFICALLY REQUIRES THAT SPECIFIC RIGHTS BE, BE ASSERTED OR THAT THEY, THAT THEY COME TO THE ATTENTION OF THE DEFENDANT.
IT'S NOT ENOUGH JUST TO SAY, "I HAVE SOME GENERAL RIGHTS." IT DOES HAVE TO BE WITH RESPECT TO A SPECIFIC PATENT, AND THERE'S BEEN NO SHOWING OF THAT WITH RESPECT TO ANY PATENT OTHER THAN THE '381, AND THERE'S BEEN NO SHOWING OF THAT AS TO THE, THE TRADE DRESS REGISTRATIONS THAT ARE BEING ASSERTED HERE.

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AND ALSO, IT -- APPLE'S COUNSEL INCORRECTLY RECITED MR. TEKSLER'S TESTIMONY.
MR. TEKSLER, THE COURT WILL RECALL, WAS NOT AT THE MEETINGS. HE HAS ZERO FOUNDATION TO TESTIFY ABOUT WHAT WAS SUPPOSEDLY SAID TO SAMSUNG AT THESE MEETINGS.

THE COURT: WELL, HE WASN'T AT THE AUGUST 4TH, 2010 MEETING, BUT HE DID SAY HE HAD SUBSEQUENT CONVERSATIONS WITH SAMSUNG EMPLOYEES AS THE DIRECTOR OF I.P. LICENSING.

MR. ZELLER: BUT HE ALSO ACKNOWLEDGED THAT HE NEVER IDENTIFIED SPECIFIC PATENTS OR SPECIFIC RIGHTS IN THOSE OTHER MEETINGS.
THE ONLY THING HE HAD -- THE ONLY THING HE WAS TRYING TO ASSERT WAS HE HAD CREATED THIS DOCUMENT FOR THE FIRST MEETING, AND THEY WERE PUTTING THOSE UP AND THEY -- THE COURT WILL RECALL THAT THEY MADE QUITE A SHOWING FOR THE JURY OF THESE PARTICULAR COMPARISONS AND THE LIKE TRYING TO GET ACROSS THE SUPPOSED NOTICE.
BUT ON CROSS-EXAMINATION, HE ADMITTED THAT, NUMBER ONE, HE WASN'T AT THAT MEETING; AND NUMBER TWO, AT NO TIME DID HE HAVE ANY KNOWLEDGE THAT SAMSUNG WAS PUT ON NOTICE AS TO THOSE SPECIFIC RIGHTS. AND THAT WAS HIS TESTIMONY.

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THE COURT: ALL RIGHT. LET ME HEAR -- WE'VE BEEN ARGUING THIS RULE 50 MOTION FOR ALMOST AN HOUR. WE STARTED AT 1:42. IT'S NOW 2:38.
LET ME HEAR -- I WANT TO HEAR FROM APPLE ON THIS ISSUE OF THE ACE, I9000, I9100. THE ONLY TESTIMONY IS THAT THESE THREE PHONES ARE GLOBAL, THEY'RE GLOBAL DEVICES, BUT THEN "ARE ANY OF THESE PRODUCTS SOLD BY ANY SAMSUNG ENTITY IN THE U.S.?"
"NO, THEY'RE NOT."
SO TELL ME WHY I SHOULDN'T GRANT SAMSUNG'S RULE 50 MOTION AS TO THOSE THREE PRODUCTS.

MR. MCELHINNY: THE QUESTION IS WHETHER OR NOT THIS JURY CAN INFER FROM TESTIMONY THAT THIS WAS A GLOBAL PRODUCT, THAT IT WAS SOLD IN THE UNITED STATES, "GLOBAL" MEANING ACROSS THE GLOBE.
AND THAT IS THE TESTIMONY.
THE CONTRARY TESTIMONY TO THAT, OR THE QUALIFICATION ON THAT, IS NOT -- IT DOESN'T COVER ALL THE SAMSUNG ENTITIES.

THE COURT: WELL, IT SAYS "ANY SAMSUNG
ENTITIES."

MR. MCELHINNY: "IN THE UNITED STATES," YOUR HONOR, "ANY SAMSUNG" -- AND THERE ARE ONLY TWO -- ONLY TWO OF THE THREE ENTITIES ARE IN THE

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UNITED STATES. THE COMPANY THAT SELLS GLOBALLY --

THE COURT: OH, I SEE WHAT YOU'RE SAYING. YOU'RE SAYING THE "ANY SAMSUNG ENTITY IN THE U.S." REFERS TO THE TWO U.S. SUBSIDIARIES AND NOT TO --
REST --

MR. MCELHINNY: IT DOES, BECAUSE THE

THE COURT: I SEE.

MR. MCELHINNY: BECAUSE THE REST OF THE TESTIMONY, WHICH IS CONSISTENT, IS THAT GLOBAL -- THAT NEITHER OF THE TWO U.S. ENTITIES ARE RESPONSIBLE FOR GLOBAL SALES.

THE COURT: OH. ALL RIGHT.

MR. ZELLER: IF I MAY, YOUR HONOR? THERE'S STILL NO EVIDENCE THAT IT'S BEEN
SOLD BY ANYBODY. WE'VE BEEN PARSING AS TO WHETHER IT CONCLUSIVELY SHOWS THAT THEY DID NOT -- THEY'VE NOW ADMITTED THAT AT LEAST IT SHOWS IT AS TO THE TWO U.S. ENTITIES, SO JUDGMENT WOULD HAVE TO BE ENTERED AS TO THOSE TWO ENTITIES FOR THAT REASON ALONE.
BUT EVEN IF ONE WERE TO INTERPRET THIS -- AND THIS IS, I DON'T THINK IT'S A FAIR
INTERPRETATION -- BUT EVEN IF THEY DID INTERPRET IT, IT WAS INTERPRETED TO MEAN THAT THEY WERE ONLY

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THE U.S. ENTITIES. THE FACT IS THAT APPLE HAS NO EVIDENCE
THAT ANY OF THOSE PHONES WERE SOLD BY SEC IN THE UNITED STATES, EITHER.
IT WASN'T OUR BURDEN -- IN OTHER WORDS, WHAT I'M TRYING TO SAY IS IT WASN'T OUR BURDEN TO COME FORWARD AND NEGATE THE ELEMENTS. THEY STILL HAVE TO PROVE THEM, EVEN IF THAT DOESN'T NEGATE IT AS TO THAT ONE ENTITY.

THE COURT: I HEAR YOU.
OKAY. ARE YOU CONCEDING, THEN, THAT STA AND OTHER U.S. SUBSIDIARIES DO NOT SELL THE ACE, THE I9000, AND THE I9100 IN THE UNITED STATES?

MR. MCELHINNY: I AM CONCEDING THAT WE HAVE NOT PUT ON ANY EVIDENCE OF THAT.

THE COURT: ALL RIGHT.

MR. MCELHINNY: OF THOSE TWO ENTITIES, YOUR HONOR.

THE COURT: ALL RIGHT. SO I'M GRANTING THE RULE 50 MOTION AS TO THE -- LET'S GET THE FULL NAME.
CAN YOU, MR. ZELLER, GIVE ME THE FULL NAME JUST SO I GET THE PRODUCT NAMES CORRECT, PLEASE.

THE COURT: ALL RIGHT. SO I'M GRANTING RULE 50 MOTION AS TO THESE THREE PRODUCTS
SAMSUNG'S AS TO SAMSUNG TELECOMMUNICATIONS AMERICA LLC AND

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SAMSUNG ELECTRONICS AMERICA, INC., BUT DENYING THE MOTION AS TO SAMSUNG ELECTRONICS COMPANY LIMITED. NOW, I AM NOT GOING TO COMMENT WORD FOR
WORD ON EACH OF THE ISSUES THAT HAS BEEN RAISED. IT'S REALLY FOR THE JURY TO MAKE A DETERMINATION AND -- SO ALL I'M GOING TO SAY IS THAT, YOU KNOW, I HAVE REVIEWED ALL OF THE EXHIBITS THAT HAVE BEEN ADMITTED INTO EVIDENCE AND HAVE HEARD ALL THE TESTIMONY THAT'S BEEN GIVEN AND A RULE 50 MOTION JUST REQUIRES THE COURT TO MAKE A DETERMINATION OF WHETHER A REASONABLE JURY WOULD HAVE A LEGALLY SUFFICIENT EVIDENTIARY BASIS TO FIND FOR APPLE, AND IF NOT, AS A MATTER OF LAW, THAT ALL OF THESE CLAIMS SHOULD BE TAKEN AWAY FROM THE PURVIEW OF THE JURY AND JUDGMENT SHOULD BE ENTERED AS A MATTER OF LAW IN FAVOR OF SAMSUNG.
THAT'S THE QUESTION THAT'S BEFORE THE COURT, NOT -- IT'S JUST SIMPLY THOSE ISSUES.
AND BASED ON WHAT THIS COURT HAS SEEN IN TERMS OF THE ADMITTED EXHIBITS AND THE TESTIMONY, I'M DENYING THE MOTION, WITH THE EXCEPTION OF THOSE THREE PRODUCTS AS TO SAMSUNG TELECOMMUNICATIONS AMERICA, LLC AND SAMSUNG ELECTRONICS AMERICA, INC. BECAUSE I DO FIND THAT A REASONABLE JURY WOULD HAVE A LEGALLY SUFFICIENT EVIDENTIARY BASIS TO FIND FOR

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APPLE ON THE CLAIMS. SO I'M DENYING THE MOTION FOR JUDGMENT AS
A MATTER OF LAW AND WILL LET THE JURY ULTIMATELY DECIDE THESE QUESTIONS.
NOW, OBVIOUSLY WE COULD GO THROUGH ALL OF THE EVIDENCE, BUT I DON'T THINK THAT'S NECESSARY AND I DO NOT WANT ANY POTENTIAL TAINT OF THIS JURY IF I GO THROUGH, YOU KNOW, WITNESS BY WITNESS OR DOCUMENT BY DOCUMENT.
BUT OBVIOUSLY BASED ON EVERYTHING I'VE SEEN, I THINK THAT THERE IS A LEGALLY SUFFICIENT EVIDENTIARY BASIS FOR A REASONABLE JURY TO MAKE THAT FINDING.
SO ANYTHING ELSE ON RULE 50? IT'S NOW 2:45, SO WE'VE BEEN GOING A LITTLE OVER AN HOUR ON THE ARGUMENT FOR THIS MOTION.
SHOULD WE JUST TAKE OUR BREAK NOW AND THEN START WITH SAMSUNG'S CASE AFTER THE BREAK? THAT MIGHT MAKE SENSE.

MR. VERHOEVEN: I THINK IT DOES, YOUR
HONOR.

THE COURT: OKAY. SO IT'S NOW 2:46. LET'S GO AHEAD AND TAKE A 15 MINUTE BREAK.

MR. VERHOEVEN: I JUST WANTED TO APPRISE THE COURT, I'VE INFORMED COUNSEL THAT, BECAUSE

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WE'VE GONE A LITTLE BIT LONGER THAN WE PROJECTED, WE HAVE ACTUALLY THREE WITNESSES WE WERE GOING TO TAKE OUT OF ORDER, THREE THIRD PARTY WITNESSES, WHO HAVE TO LEAVE TODAY, AND NOW WE'RE NOT SURE WE'RE GOING TO GET ALL THREE ON AND OFF, SO WE'RE -- THERE'S ONE THAT'S REALLY CRITICAL THAT HAS TO LEAVE TODAY, AND I'VE INFORMED THEM ABOUT THIS. THAT'S BEN BEDERSON.

THE COURT: OKAY.

MR. VERHOEVEN: AND WE HAD NOT LISTED HIM -- WE HAD LISTED HIM AS THIRD IN ORDER COMING UP.

THE COURT: THAT'S FINE. ALL RIGHT.
AND THEN AFTER THAT, YOU'LL GO TO MR. PALTIAN AND MR. ZORN?

MR. VERHOEVEN: YES, YOUR HONOR.

THE COURT: OKAY. AND I DOUBT WE'LL GET TO MR. WILLIAMS TODAY.

MR. VERHOEVEN: I THINK THAT'S PROBABLY RIGHT, YOUR HONOR.

THE COURT: ALL RIGHT. SO I'LL GET THE OBJECTIONS ON MR. WILLIAMS OUT TONIGHT, AS WELL AS ALL OF THE OTHER OBJECTIONS TO THE OTHER WITNESSES.
I KNOW YOU WANTED TO MAKE A RECONSIDERATION MOTION AS TO MR. YANG. WHY DON'T WE DO THAT AT THE END OF THE DAY. IS THAT OKAY?

MR. VERHOEVEN: THAT'S FINE, YOUR HONOR. IT'LL JUST BE VERY SHORT.

THE COURT: OKAY. AND THEN I KNOW SOME OTHER MOTIONS WERE FILED REGARDING ABSENT WITNESSES AND STAYS OF SEALING AND WE'LL TRY TO GET THOSE OUT TODAY.

MR. VERHOEVEN: THANK YOU, YOUR HONOR.

THE COURT: ALL RIGHT. THANK YOU. LET'S TAKE THE BREAK NOW.

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(WHEREUPON, A RECESS WAS TAKEN.)

THE COURT: ALL RIGHT. THANK YOU. PLEASE TAKE A SEAT. LET'S BRING IN OUR JURY.
IN?

MR. JACOBS: YOUR HONOR, BEFORE THEY COME IN?

THE COURT: YES?

MR. JACOBS: THERE'S AN EXHIBIT ON THE OTHER MATERIALS, ON THE LIST OF MATERIALS THAT SAMSUNG INTENDS TO USE. IT'S THE -- IT'S SDX 3951.011.

IT'S A DIFFERENT DEVICE FROM THE DEVICE THAT'S ON THE EXHIBIT LIST FOR THIS -- RELEVANT TO THIS WITNESS. IF IT'S NOT GOING TO BE USED OR COMING IN, THEN WE DON'T NEED TO DEAL WITH IT, BUT I WOULD ASK BEFORE THE JURY COMES IN.

THE COURT: 3951, WHAT WERE THE LAST THREE OR FOUR DIGITS?

MR. JACOBS:
.011.

THE COURT: I DON'T HAVE THAT IN MINE.

MR. JACOBS:
TERRIFIC. MAYBE IT WON'T
COME IN.

THE COURT:
MINE ENDS AT .010.

MR. DEFRANCO: WE ACTUALLY HAVE A SLIDE OF THIS
THAT WE'RE GOING TO MOVE TO ENTER INTO EVIDENCE, BUT NOT THE DEVICE ITSELF, SO WE DON'T

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NEED TO WORRY ABOUT IT BECOMING PART OF THE RECORD, THE .011.

MR. JACOBS: SAME OBJECTION, YOUR HONOR, BUT I DON'T KNOW THAT I SEE THE SLIDE.

THE COURT: I DON'T HAVE THE SLIDE, EITHER.

MR. DEFRANCO: THE SLIDE IS 3951.006. IT'S JUST A PHOTOGRAPH OF THE SAME DEVICE.

MR. JACOBS: WE WOULD OBJECT, YOUR HONOR.

THE COURT: WHAT'S THE OBJECTION?

MR. JACOBS: THE DEVICE IS NOT ON THE
EXHIBIT LIST. THE PHOTO OF THE DEVICE SHOULD NOT COME IN.

THE COURT: IF THE DEVICE IS NOT ON THE LIST, THEN IT'S EXCLUDED.
ALL RIGHT. WHAT ELSE?

MR. JACOBS: WE'RE READY, YOUR HONOR.

THE COURT: OKAY. THEN WOULD YOU PLEASE
BRING IN THE JURY?

THE CLERK: YES, YOUR HONOR.

(WHEREUPON, THE FOLLOWING PROCEEDINGS WERE HELD IN THE PRESENCE OF THE JURY:)

THE COURT: THANK YOU FOR YOUR PATIENCE. SORRY TO MAKE YOU WAIT SO LONG, BUT WE HAD TO TAKE CARE OF SOMETHING.

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IT'S 3:04. PLEASE CALL YOUR FIRST
WITNESS.

MR. VERHOEVEN: THANK YOU, YOUR HONOR.

SAMSUNG, AS YOUR HONOR KNOW, HAS ALREADY, BY AGREEMENT, CALLED ITS FIRST WITNESS OUT OF ORDER, MR. JUSTIN DENISON. HE WAS OUR FIRST WITNESS.
WE HAVE THREE THIRD PARTY WITNESSES, YOUR HONOR, THAT WE'RE GOING TO NEED TO CALL OUT OF ORDER.

THE FIRST IS -- AND THIS IS THE ONE WE'RE CALLING RIGHT NOW -- PROFESSOR BEN BEDERSON.

A: IT'S A MOBILE GRAPHICAL USER INTERFACE APPLICATION TO LET PEOPLE ACCESS A LOT OF INFORMATION ON A MOBILE DEVICE.

Q: OKAY. WE'RE GOING TO LOOK AT SOME VIDEO OF THE DEVICE ITSELF. LET'S GIVE A LITTLE BIT OF BACKGROUND FIRST. OKAY? ARE YOU WITH ME?

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DID OTHERS WORK WITH YOU ON THE DEVELOPMENT OF LAUNCHTILE?

A: YES. I WORKED ON -- WITH A FEW PEOPLE. MY PH.D. GRADUATE STUDENT, AMY KARLSON; RESEARCH ASSISTANT, AARON CLAMAGE; AND THE WORK WAS DONE IN COLLABORATION WITH MICROSOFT AND THEY SPONSORED THE RESEARCH, THEY PAID FOR IT, SO I WORKED WITH SOMEONE THERE NAMED JOHN SANGIOVANNI.

Q: GENERALLY, WHAT LED YOUR TEAM TO COME ABOUT TO DEVELOP LAUNCHTILE?

A: WE WERE TRYING TO SOLVE TWO MAJOR PROBLEMS. ONE WAS HOW TO FIT A LOT OF INFORMATION ON A SMALL DEVICE; AND THE SECOND WAS TO DESIGN A USER EXPERIENCE THAT PEOPLE COULD USE WITH JUST A SINGLE HAND RATHER THAN TWO HANDS OR A STYLUS.

Q: DID YOU SOLVE THOSE PROBLEMS?

A: I BELIEVE WE DID.

Q: TELL US HOW YOU DID IT, PLEASE.

A: I HAD BEEN WORKED FOR ALMOST TEN YEARS AT THE TIME ON AN INTERFACE APPROACH I CALLED ZOOMABLE USER INTERFACES, AND WE APPLIED THAT TECHNIQUE TO LAUNCHTILE.

Q: OKAY. CAN YOU JUST GIVE US A SENTENCE OR TWO ABOUT WHAT A ZOOMABLE USER INTERFACE IS.

A: SURE. GENERALLY SPEAKING, IT'S AN INTERFACE

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WHERE YOU PRESENT A BIG INFORMATION SPACE AND YOU CAN ZOOM OUT TO GET SOME CONTEXT, AND ZOOM IN TO LOOK A LITTLE CLOSER TO GET MORE DETAIL.

Q: OKAY. WAS THIS THE FIRST TIME IN YOUR CAREER THAT YOU WORKED WITH ZOOMABLE USER INTERFACES?

A: NO. AS I SAID, I'VE BEEN DOING IT FOR A WHILE. I THINK I STARTED IN 1993.

Q: WHAT, WHAT TYPE OF DEVICE, IN TERMS, WAS YOUR LAUNCHTILE PROGRAM ON?

A: IT WAS DESIGNED IN GENERAL TO WORK ON ANY KIND OF MOBILE TOUCHSCREEN DEVICE. IN PARTICULAR, WE BUILT THIS, THIS PARTICULAR SOFTWARE TO RUN ON THE MICROSOFT POCKET P.C. PLATFORM, AND WE WERE USING OFTEN AN H-P IPAQ PDA.

Q: IS THAT WHAT THIS IS?

A: YES.

Q: YOU'VE HAD EXPERIENCE H-P IPAQ, SIR?

A: YES.

Q: LET ME JUST NOTE, I'M HOLDING UP WHAT'S BEEN MARKED AS DX EXHIBIT 518. WE HAVE A SLIDE OF THIS AND A VIDEO WE'RE GOING TO
SHOW.

IS THIS THE SAME AS THE DEVICE I'M HOLDING UP, EXHIBIT 518, DX 518, DOCTOR?

A: YES, IT IS.

Q: DO US A FAVOR. I WANT YOU TO NARRATE THE VIDEO. OBVIOUSLY BEFORE WE START THE VIDEO AND NARRATE IT, CAN YOU JUST TELL US GENERALLY WHAT'S SHOWN ON THE SCREEN ON THE IPAQ DEVICE ITSELF?

A: SURE. THIS IS THE LAUNCHTILE APPLICATION, AND WHAT YOU'RE SEEING HERE IS WHAT WE CALLED AN INTERACTIVE ZOOM SPACE.

IT IS A COLLECTION OF 36 TILES WHICH ARE, YOU KNOW, INFORMATION SOURCES. YOU CAN SEE ON THE BOTTOM RIGHT THERE'S SOME STOCK TILES. IN THE MIDDLE, YOU MIGHT BE ABLE TO MAKE OUT THAT THERE'S A LITTLE MAP, AND E-MAIL TILE, A CALENDAR, A PHONE. THERE'S ALL KINDS OF INFORMATION SOURCES HERE.

AND THEN AS YOU'LL SEE IN THE VIDEO, YOU WOULD -- YOU'LL BE ABLE TO SEE THAT YOU CAN ZOOM IN AND OUT AND INTERACT WITH THESE FILES.

Q: LET'S SHOW THE VIDEO, AND WHY DON'T YOU NARRATE IT FOR US AS IT PLAYS. OKAY?

(WHEREUPON, A VIDEOTAPE WAS PLAYED IN OPEN COURT OFF THE RECORD.)

THE WITNESS: SURE. SO FIRST YOU CAN SEE SOMEONE TOUCH THE VIDEO. IT ZOOMS INTO A REGION I

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CALLED A ZONE. YOU ZOOM IN FURTHER TO AN APPLICATION
TILE.

YOU CAN TOUCH THE BACK BUTTON. IT'LL ZOOM OUT TO THAT MIDDLE ZONE LEVEL, AND YOU CAN ZOOM OUT FURTHER BACK TO WHERE YOU STARTED WITH WORLD VIEW IN THE ZOOM SPACE.

BY MR. DEFRANCO:

Q: OKAY. AND I THINK THERE'S ANOTHER SLIDE THAT GOES ALONG WITH THIS. THIS IS SDX 3951.003. CAN YOU DESCRIBE GENERALLY WHAT'S SHOWN ON THIS SLIDE?

A: SURE. SO THIS IS SHOWING YOU WHAT WE SAW ON THE VIDEO. ON THE LEFT IS THAT WORLD VIEW WHERE WE STARTED. THIS THE ZOOM SPACE THAT CONTAINS ALL OF THE TILES.

YOU CAN TAP ON ANY ONE OF THOSE LITTLE GROUPS OF FOUR TILES CALLED A ZONE, AND IF YOU TAP IN THAT MIDDLE GROUP, THAT MIDDLE ZONE, THAT TAKES YOU TO THE ZONE VIEW WHERE FOUR TILES ARE SHOWN. THERE'S MORE INFORMATION DISPLAYED ABOUT EACH ONE.

YOU CAN THEN TAP AGAIN AND IT'LL TAKE YOU INTO THE APPLICATION VIEW.

Q: LET'S -- I WANT TO FOLLOW UP WITH A LITTLE DETAIL ON SOME OF THE TERMS, SOME OF THE THINGS YOU EXPLAINED TO US IN THIS DEVICE THAT USES

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LAUNCHTILE. OKAY?

A: OKAY.

Q: YOU USED -- YOU TALKED ABOUT THE ZOOM SPACE GENERALLY. WHAT IS THE ZOOM SPACE AGAIN, PLEASE?

A: SO A ZOOM SPACE IS JUST A SINGLE COHERENT COLLECTION OF TILES, IN THIS CASE 36 TILES, WHERE YOU COULD ZOOM IN AND OUT TO OR, AS YOU'LL SEE, OTHER WAYS TO ACCESS THE INFORMATION.

Q: OKAY. NOW, THIS, THIS WAS A -- THE SOURCE CODE -- THE CODE ON THIS, FOR LAUNCHTILE, THAT'S SOMETHING THAT YOU ACTUALLY SUPERVISED?

A: YES. I CREATED THE -- I SUPERVISED THE DEVELOPMENT OF THIS APPLICATION.

Q: WITH THOSE FOLKS YOU MENTIONED EARLIER THIS MORNING?

A: YES.

Q: AND FOR EACH ONE OF THOSE TILES, YOU GAVE US SOME EXAMPLES EARLIER ABOUT E-MAIL APPLICATION, THE ABILITY TO OBTAIN STOCK, I THINK I SAW NASCAR IN THE CORNER.
WAS THERE ACTUALLY OPERATING CODE UNDERLYING EACH ONE OF THOSE TILES IN THE LAUNCHTILE PROGRAM AT THAT TIME?

A: SO, YOU KNOW, EVERY TILE FULLY WAS CAPABLE OF BEING ZOOMED IN AND OUT OF AND NAVIGATING WITHIN

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THE ZOOM SPACE, BUT THE TILES THEMSELVES, IF YOU WENT ALL THE WAY INTO THE APPLICATION VIEW, NO, MANY OF THEM -- MOST OF THEM WERE NOT IMPLEMENTED BECAUSE THE GOAL WAS TO FOCUS NOT ON THE INTERACTING WITH THE DETAILED DATA, BUT WAS TO EXPERIENCE THE NAVIGATION.

MR. DEFRANCO: YOUR HONOR, AT THE MOMENT, BEFORE I FORGET, I'D LIKE TO MOVE IN DX 518 AND SLIDES 3951.001, .002 AND .003.

THE COURT: ANY OBJECTION?

MR. JACOBS: OBJECT TO .003, YOUR HONOR. IT CONTAINS ARGUMENTATIVE CONTENT ON IT RELATED TO CLAIM INTERPRETATION AND THIS WITNESS IS NOT QUALIFIED TO ARGUE THAT.

MR. DEFRANCO: YOUR HONOR, I'LL REPRESENT THE WITNESS IS NOT GOING TO -- THIS WAS A SLIDE THAT WAS ALSO USED IN OPENING. THAT'S WHY WE WANTED TO USE IT FOR CONTINUITY.

BUT THE WITNESS --

THE COURT: THE FIRST BOX AND THE SECOND BOX SHOULDN'T BE ON THIS, SO THAT'S DENIED.

MR. JACOBS: JUST TO BE CLEAR, YOUR HONOR, YOU SAID DENIED, BUT THE OBJECTION IS SUSTAINED?

THE COURT: YES, .003 IS NOT COMING INTO
EVIDENCE.

BY MR. DEFRANCO:

Q: LET'S TALK ABOUT -- YOU MENTIONED THE ZOOM FUNCTIONALITY?

MR. JACOBS: YOUR HONOR, CAN WE HAVE THAT TAKEN DOWN?

THE COURT: THAT'S FINE.

BY MR. DEFRANCO:

Q: ZOOM FUNCTIONALITY, DOCTOR, CAN YOU EXPLAIN HOW THE APPEARANCE OF A TILE -- WHAT HAPPENED TO THE APPEARANCE OF A TILE IN YOUR LAUNCHTILE PROGRAM AS YOU WOULD ZOOM IN ON A TILE?

A: SURE. SO AS YOU ZOOM IN, YOU GET MORE AND MORE SPACE AVAILABLE FOR EACH TILE. AND SO RATHER THAN JUST PURELY GEOMETRICALLY MAKING THE TILES LARGER, WE WOULD USE THE SPACE TO SHOW MORE INFORMATION.

SO IN THE E-MAIL TILE, FOR EXAMPLE, WHEN YOU ZOOMED OUT, IT WOULD JUST SAY SOMETHING LIKE 11

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UNREAD, MEANING 11 UNREAD MESSAGES. AND IF YOU ZOOM IN FURTHER, IT WOULD SHOW SOME INFORMATION ABOUT THE E-MAIL IN YOUR INBOX; AND THEN WHEN YOU ZOOMED IN ALL THE WAY, THEN YOU GOT A FULL LIST OF E-MAIL MESSAGES, WHO THEY'RE FROM AND THEIR SUBJECTS AND SO ON.

Q: WAS THERE A REASON WHY YOU TEAM DECIDED TO CHANGE THE APPEARANCE OF A TILE AS YOU ZOOMED IN ON IT?

A: YEAH. AS I SAID, USING PURE GEOMETRIC ZOOMING WOULD HAVE WORKED, BUT THAT WAS VERY SIMPLE AND WOULD NOT HAVE USED THE SCREEN SPACE VERY EFFECTIVELY.

SO THE IDEA OF SHOWING DIFFERENT VISUAL REPRESENTATIONS AS YOU GOT CLOSER WAS A NATURAL WAY TO TAKE ADVANTAGE OF THE SPACE, AND ALSO THE KIND OF THING I'D BEEN TALKING ABOUT IN MY RESEARCH FOR TEN YEARS PREVIOUS.

Q: IS THERE A NAME FOR THAT TYPE OF ZOOMING?

A: YES. WE CALLED IT SEMANTIC ZOOMING.

Q: AND AGAIN, THE DIFFERENCE BETWEEN GEOMETRIC AND SEMANTIC ZOOMING?

A: SO GEOMETRIC IS PURE VISUAL SCALING. YOU GET CLOSER, IT GETS LARGER.
SEMANTIC ZOOMING IS AS IT GETS LARGER,

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YOU ADD MORE, OR YOU CAN CHANGE THE VISUAL REPRESENTATION TO SHOW MORE RELATED INFORMATION.

Q: OKAY. YOU SHOULD HAVE A BINDER OF EXHIBITS IN FRONT OF YOU. THERE'S AN ARTICLE I'D LIKE YOU TO LOOK AT.

AND RYAN, IF YOU CAN PUT A SLIDE ON THE SCREEN. IT'S A SNIPPET FROM THE ARTICLE. IT'S 3951.002.

A: SORRY. IS THIS THE BIG BINDER OR LITTLE BINDER?

Q: IT SHOULD BE IN THE BLACK BINDER RIGHT IN FRONT OF YOU.

A: OKAY.

Q: NOW, DOCTOR, CAN YOU LOOK UP ON THE SCREEN FOR A MOMENT AS YOU'RE FLIPPING?

A: YES, I SEE IT.

Q: SORRY ABOUT THAT. YOU'RE THERE WITH ME IN THE ARTICLE.

A SENTENCE OR TWO, PLEASE, WHAT ARE WE LOOKING AT? WHAT IS THIS ARTICLE?

A: SO THIS IS A PAPER I WROTE AT ANOTHER CONFERENCE, I BELIEVE IT WAS IN 1994, DESCRIBING MY WORK IN ZOOMABLE USER INTERFACES AT THE TIME.
AND IN PARTICULAR, I WAS DESCRIBING THIS HIGHLIGHTED SECTION, SEMANTIC ZOOMING, JUST THE WAY

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I WAS JUST DESCRIBING IT.

Q: THE YEAR, I'M SORRY, DID YOU GIVE US THE YEAR?

A: I THINK IT WAS 1994.

A: AND IS THIS SEMANTIC VERSUS GEOMETRIC? THIS IS ABOUT WHICH TYPE?

A: THIS DESCRIBES SEMANTIC ZOOMING.

MR. DEFRANCO: YOUR HONOR, I WOULD MOVE FOR ADMISSION OF SLIDE 3951.002, AND EXHIBIT 546.002.

MR. JACOBS: YOUR HONOR, I BELIEVE COUNSEL HAS GOT A TYPO IN HIS OUTLINE. IT'S 3951.010, WHICH IS AN EXAMPLE OF DX 546. WE HAVE NO OBJECTION TO DX 546, AND IF EXPANSIONS LIKE THIS ARE COMING IN, WE HAVE NO OBJECTION TO THIS, EITHER.

MR. DEFRANCO: .010, YOUR HONOR, THAT'S
CORRECT.

THE COURT: SO I WAS UNCLEAR. YOU HAVE NO OBJECTION TO 3951.010?

MR. JACOBS: CORRECT, YOUR HONOR.

THE COURT: OKAY. THAT'S ADMITTED.

(WHEREUPON, DEFENDANT'S EXHIBIT NUMBER 3951.010, HAVING BEEN PREVIOUSLY MARKED FOR IDENTIFICATION, WAS ADMITTED INTO EVIDENCE.)

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THE COURT: GO AHEAD, PLEASE. ARE YOU ALSO SEEKING THE ACTUAL UNDERLYING ARTICLE AS WELL?

MR. DEFRANCO: YES, YOUR HONOR. THAT'S DX 546.002.

THE COURT: I JUST HAVE IT AS 546. THAT'S THE ACTUAL ARTICLE AS WELL.

MR. DEFRANCO: YES, YOUR HONOR.

THE COURT: AND NO OBJECTION TO THAT AS WELL, RIGHT?

MR. JACOBS: CORRECT, YOUR HONOR.

THE COURT: THAT'S ADMITTED.

(WHEREUPON, DEFENDANT'S EXHIBIT NUMBER 546, HAVING BEEN PREVIOUSLY MARKED FOR IDENTIFICATION, WAS ADMITTED INTO EVIDENCE.)

BY MR. DEFRANCO:

Q: SHIFT GEARS FOR A MOMENT, DOCTOR. WE TALKED ABOUT ZOOMING, MOVING AROUND WHAT YOU CALL THE ZOOM SPACE.

WERE THERE OTHER METHODS OF NAVIGATING AROUND THE ZOOM SPACE IN YOUR LAUNCHTILE PROGRAM?

A: YES. SO WHEN YOU ARE IN THAT MIDDLE ZOOM LEVEL IN THE ZONE VIEW, YOU COULD ALSO WHAT I CALL PAN FROM SIDE TO SIDE, FROM ONE ZONE TO ANOTHER BY USING YOUR FINGERS TO DRAG ON THE SCREEN.

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Q: OKAY. LET'S LOOK AT ANOTHER VIDEO.

RYAN, PLEASE, IF I HAVE THE NUMBER RIGHT,
SDX 3951.004.

(WHEREUPON, A VIDEOTAPE WAS PLAYED IN
OPEN COURT OFF THE RECORD.)

THE WITNESS: SO WHAT YOU'RE SEEING IN
THIS VIDEO IS YOU ZOOMED IN, AS WE DID BEFORE, TO THE ZONE VIEW, AND NOW WE'LL DRAG WITH THE FINGER AND WE'LL GO DIRECTLY TO THE NEXT ZONE IN THE DIRECTION THAT YOU'RE DRAGGING THE FINGER.

SO WE WENT LEFT, UP, RIGHT, DOWN, AND WE GO BACK TO WHERE WE STARTED.

THEN IF YOU DON'T DRAG YOUR FINGER ENOUGH, IT'LL SNAP BACK TO THE ZONE THAT YOU WERE IN BEFORE. SO, AGAIN, YOU DRAG, YOU DON'T DRAG IT ENOUGH, IT SNAPS BACK.

AND SIMILARLY, IF YOU DRAG UP, BUT YOU DON'T DRAG FAR ENOUGH, IT'LL SNAP BACK.

BY MR. DEFRANCO:

Q: THAT SNAP BACK FEATURE, WAS THAT A FEATURE THAT YOU AND YOUR TEAM INTENTIONALLY CODED OR PROGRAMMED TO WORK IN THE LAUNCHTILE PROGRAM?

A: WELL, YEAH, OF COURSE. IT WAS PART OF THE SOFTWARE OF THE LAUNCHTILE.

Q: WHY DID YOU AND YOUR TEAM DO THAT?

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A: WELL, THERE'S A FEW ADVANTAGES TO THIS KIND OF INTERACTION. A KEY ONE IS WE DON'T WANT A USER TO GET STUCK BETWEEN ZONES. I MEAN, THE SYSTEM IS DESIGNED TO HAVE THESE NICE ZONE VIEWS. YOU CAN MOVE BETWEEN ZONES, BUT YOU WOULDN'T WANT TO BE STUCK HALFWAY BETWEEN ONE.

ANOTHER REASON IS THAT USERS DON'T HAVE HIGH PRECISION WHEN THEY'RE USING THIS KIND OF DEVICE, SO IF YOU REQUIRE THEM TO MOVE THEIR FINGER IN SUCH A WAY THAT THEY GOT PERFECT ALIGNMENT, THAT WOULD BE PRETTY ANNOYING.

SO INSTEAD THIS WAY THEY ONLY HAVE TO GET NEARBY AND THEN THE SYSTEM WILL TAKE THEM WHERE THEY WANT TO GO.

THE OTHER THING IS THOSE TWO FEATURES TOGETHER ENABLE PEOPLE TO EXPLORE AND THUS FIND NEW CONTENT, AND IT ADDED UP TO BEING FUN.

Q: LET'S STEP BACK FOR A MOMENT, DOCTOR. RECALL GENERALLY ABOUT HOW LONG IT TOOK FOR YOUR TEAM TO DEVELOP THE OVERALL LAUNCHTILE PROGRAM?

A: YES. WE DID IT IN THE SUMMER OF 2004. SO IT WAS APPROXIMATELY THREE MONTHS.

Q: AND WE LOOKED AT THIS H-P IPAQ DEVICE. WERE YOU ABLE TO VERIFY THE DATE OF THE SOFTWARE THAT'S

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RUNNING ON THIS DEVICE THAT WAS SHOWN ON THE VIDEO THAT WE PUT UP EARLIER?

A: YES. IT'S NOVEMBER 9TH, 2004, WHICH I VERIFIED BY LOOKING AT MY COMPUTER WHICH CONTAINED THE CODE THAT ENDED UP ON THAT DEVICE.

Q: AND WHEN CODE WENT -- WHEN COMPUTER CODE IS ACTUALLY RUNNING ON THE DEVICE, WHAT'S THE GENERAL TERM FOR THAT TYPE OF CODE?

A: IT'S USUALLY CALLED EXECUTABLE CODE.

Q: AND THERE'S BEEN TALK IN THIS CASE ABOUT SOURCE CODE. CAN YOU TELL US THE DIFFERENCE BETWEEN EXECUTABLE AND SOURCE CODE?

A: SO SOURCE CODE IS WHAT A HUMAN PROGRAMMER WRITES. HE GOES THROUGH A PROCESS TO CONVERT IT INTO EXECUTABLE CODE, WHICH IS WHAT A COMPUTER CAN EXECUTE.

Q: OKAY. AND WAS THERE A LATER VERSION -- WELL, YOU HAVE WHAT TYPE OF CODE FOR THIS DEVICE DATING BACK TO NOVEMBER 9TH, 2004? DO YOU HAVE EXCLUDABLE OR SOURCE CODE?

A: EXCLUDABLE CODE FOR THAT PARTICULAR VERSION. [PJ: SIC. THE WORD SHOULD BE EXECUTABLE, NOT EXCLUDABLE.]

Q: OKAY. WAS THERE A -- DID YOU AND YOUR TEAM DEVELOP A LATER VERSION OF THIS CODE LATER ON IN TIME?

A: YES, WE DID.

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Q: AND WHAT WAS THE NAME OF THAT CODE?

A: AT THE TIME WE WERE PLANNING ON INTEGRATING WITH IT WITH ANOTHER TECHNOLOGY CALLED XNAV. WE NEVER DID THAT INTEGRATION, BUT THE NAME STUCK.

Q: AND WAS THE XNAV SOURCE CODE EVER PROVIDED TO A THIRD PARTY?

A: YES. AS I MENTIONED, WE HAVE BEEN UNDER CONTRACT WITH MICROSOFT, AND SO WE SUPPLIED THE CODE TO MICROSOFT WHEN WE WERE FINISHED WITH THE DEVELOPMENT.

Q: AND THE XNAV SOURCE CODE, JUST SO I'M CLEAR, WAS THAT PREPARED BY THE TEAM THAT WAS WORKING UNDER YOU?

A: YES. SO AMY KARLSON STARTED THE DEVELOPMENT, AARON CLAMAGE ENDED UP FINISHING THE DEVELOPMENT, AND I WAS ADVISING AND WORKING WITH THEM CLOSELY DURING THAT PROCESS.

Q: ADVISING AND SUPERVISING THAT WORK WHEN YOU WERE AT THE UNIVERSITY OF MARYLAND; IS THAT CORRECT?

A: YES.

Q: AND THE ACTUAL XNAV SOURCE CODE THAT'S BEEN USED IN THIS CASE, WHERE DID THAT COME FROM, YOUR OWN COMPUTER?

A: YES, I HAVE THAT.

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Q: AND DO YOU HAVE PERSONAL KNOWLEDGE OF THE OPERATION OF THAT SOURCE CODE?

A: YES, I DO.

Q: IS -- THERE SHOULD BE AN EXHIBIT FOLDER WITH SOME SOURCE CODE PRINTED OUT UP THERE. IT SHOULD BE MARKED DX 528, IF I HAVE IT RIGHT. SOMEBODY WILL CORRECT ME IF I DON'T.

A: OKAY.

Q: IT SHOULD BE IN A FOLDER, IN A BROWN FOLDER. A OKAY.

Q: IS THAT THE XNAV SOURCE CODE?

A: YES, IT IS.

MR. DEFRANCO: YOUR HONOR, WE WOULD MOVE EXHIBIT DX 528 INTO EVIDENCE.

THE COURT: ANY OBJECTION?

MR. JACOBS: NO OBJECTION.

THE COURT: IT'S ADMITTED.

(WHEREUPON, DEFENDANT'S EXHIBIT NUMBER 528, HAVING BEEN PREVIOUSLY MARKED FOR IDENTIFICATION, WAS ADMITTED INTO EVIDENCE.)

MR. DEFRANCO: THANK YOU.

Q: LET'S PUT UP A SLIDE THAT'S GOT A SNIPPET OF
THAT CODE. I UNDERSTAND IT'S OKAY TO SHOW THIS ON THE PUBLIC SCREEN. IS THAT OKAY?

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A: YES.

Q: THIS IS, IF I HAVE IT RIGHT AGAIN, SDX 3951.007. IS THIS PART OF THE XNAV SOURCE CODE YOU'VE SEEN, DOCTOR?

A: YES, IT IS.

Q: AND TELL US A LITTLE BIT ABOUT THE ZONES AND THE WORLD VIEW THAT YOU DESCRIBED EARLIER, HOW THAT'S LAID OUT IN THE CODE JUST IN VERY GENERAL TERMS TO GIVE US AN OVERALL FEEL.

DO YOU UNDERSTAND WHAT I'M ASKING?

A: WITH RESPECT TO THIS CODE OR JUST IN GENERAL?

Q: WITH RESPECT TO THIS CODE.

A: ALL RIGHT. SO THIS IS SHOWING THE CREATION OF A PART OF THAT ZOOM SPACE. IN PARTICULAR, IT'S CREATING ONE OF THOSE ZONES, I CALLED THEM QUAD TILES BECAUSE THE CODE -- THE ZONE HAD FOUR TILES, SO WE CALLED THEM QUAD TILES.

THIS CODE HERE, I KNOW IT'S HARD TO READ UP THERE, BUT IT WAS REPRESENTING THAT MIDDLE ZONE IN THE MIDDLE COLUMN, SO WE CALLED IT THE MIDDLE MIDDLE QUAD TILE.

AND THEN WHAT YOU SEE HERE IS FOUR SECTIONS OF CODE THAT CREATE THE STRUCTURE OF THAT ZONE.

SO WE FIRST SEE IT CREATING THE UPPER

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LEFT MAP TILE, AND THEN THE LOWER LEFT CALENDAR TILE, THEN THE UPPER RIGHT IN BOX TILE, AND THEN THE LOWER RIGHT PHONE TILE.

Q: WE TALKED EARLIER ABOUT ZOOMING, SNAP BACK FUNCTIONALITY IN LAUNCHTILE. DO YOU REMEMBER THAT?

A: YES.

Q: WERE YOU ABLE TO COMPARE THOSE TWO FUNCTIONALITIES IN THE TWO DIFFERENT PRODUCTS/CODE THAT YOU LOOKED AT?

A: SO, YES, I -- I HAD THE TWO SYSTEMS, LAUNCHTILE SYSTEM THAT YOU SAW AND XNAV, WHICH WAS THE LATER SYSTEM RUNNING ON A DIFFERENT DEVICE, AND I COMPARED THE ZOOMING AND THE SNAP BACK FEATURE AND CONFIRMED THAT THE SNAP BACK FEATURE WORKED IDENTICALLY ON BOTH THE ZOOMING FEATURE -- IT WORKED ALMOST IDENTICALLY. THERE WAS A SLIGHT VISUAL CHANGE IN THE LATER XNAV AND THE WAY THE BLUE DOTS WERE REPRESENTED.

Q: OKAY. THANKS.

SHIFT GEARS MAYBE ONE MORE TIME. LET'S TALK ABOUT WHEN YOU TOLD, YOU AND YOUR TEAM TOLD THE PUBLIC ABOUT LAUNCHTILE. OKAY?

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A: UM-HUM.

Q: YOU DID THAT AT SOME POINT. CAN YOU TELL US ABOUT IT? WHEN WAS THE FIRST TIME YOU DID IT, AND GIVE US A COUPLE OF SENTENCES ABOUT THE CIRCUMSTANCES SURROUNDING THAT. OKAY?

A: SURE. SO AS I MENTIONED, WE DEVELOPED THE CODE IN THE SUMMER OF 2004. I KNOW WE COMPLETED IT BY SEPTEMBER 2004 BECAUSE AT THAT POINT WE HAD WRITTEN A PAPER AND SUBMITTED IT TO A CONFERENCE.

IT LATER GOT ACCEPTED TO THE CONFERENCE. IT WAS CALLED THE CHI, COMPUTER HUMAN INTERACTION, AND IT WAS EVENTUALLY PUBLISHED THERE IN APRIL OF 2005.

Q: OKAY. AND HOW WAS YOUR PAPER AND LAUNCHTILE RECEIVED AT THE CHI CONFERENCE? CAN YOU TELL US?

A: WE GOT REALLY EXCELLENT FEEDBACK. IN FACT, IT WAS NOMINATED FOR A BEST PAPER AWARD, WHICH IS GIVEN TO 5 PERCENT OF THE ACCEPTED PAPERS. IN FACT, NORMALLY ABOUT 20 PERCENT OF THE SUBMITTED PAPERED GOT ACCEPTED, SO IT WAS PRETTY SELECTIVE.

AND THEN WE GOT REALLY EXCELLENT FEEDBACK INFORMALLY DURING THE EVENT, DURING THE CONFERENCE.

Q: OKAY. AND DID YOU ACTUALLY PRESENT LAUNCHTILE ITSELF TO THE ATTENDEES AT THE CHI CONFERENCE?

A: YES. IT WAS A BIG CONFERENCE, SOMETHING LIKE

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2500 PEOPLE, AND SOME NUMBER OF THOSE -- I'M NOT SURE EXACTLY HOW MANY, A FAIR NUMBER -- ATTENDED OUR SESSION, WHICH WAS A FORMAL PRESENTATION. I THINK AMY KARLSON ACTUALLY DELIVERED, MY STUDENT, DELIVERED THE PRESENTATION. WE HAD POWERPOINT SLIDES. WE SHOWED A VIDEO.

Q: OKAY. LET'S -- WE HAVE A VIDEO. LET'S PLAY THE VIDEO. IF I REMEMBER IT RIGHT, THIS VIDEO HAS SOUND.

A: YES.

Q: IS THAT RIGHT? SO WE'LL JUST PLAY IT. YOU DON'T NEED TO NARRATE THIS VIDEO.

HOLD ON FOR ONE SECOND, PLEASE. YOU RECOGNIZE THE COVER OF THIS VIDEO,
SIR?

A: YES, I BELIEVE THIS IS THE VIDEO WE ACTUALLY PRESENTED AT THAT CONFERENCE.

Q: AGAIN, WHAT WAS THE DATE OF THAT?

A: APRIL 2005.

Q: OKAY. LET'S PLAY THE VIDEO, PLEASE, RYAN.

(WHEREUPON, A VIDEOTAPE WAS PLAYED IN OPEN COURT OFF THE RECORD.)

BY MR. DEFRANCO:

Q: HAVING SEEN THAT, DOCTOR, DOES THAT CONFIRM, OR NOT, THAT THAT'S THE VIDEO THAT WAS SHOWN AT THE

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CHI CONFERENCE YOU TESTIFIED ABOUT IN APRIL OF 2005?

A: THAT IS THE SAME ONE. THERE WAS SOME OTHER PIECES, SOME OTHER PARTS, BUT THAT'S THE WHOLE SEGMENT ON LAUNCHTILE.

Q: OTHER PARTS RELATED TO SOMETHING DIFFERENT THAN LAUNCHTILE? A CORRECT.

Q: ALL RIGHT. WE'RE NOT GOING TO TAKE THE TIME TO SHOW THOSE.

YOUR HONOR, WE WOULD MOVE INTO EVIDENCE THIS VIDEO, WHICH IS SDX 3951.009 AND THE PREVIOUS SLIDE WHICH SHOWED SOME SOURCE CODE, WHICH IS SDX 3951.007.

THE COURT: IS THIS DX 518 IS THE ACTUAL VIDEO? THAT'S WHAT I HAVE IN MY BINDER. DO YOU WANT THAT IN AS --

MR. DEFRANCO: THAT'S THE DEVICE ITSELF, YOUR HONOR. THE VIDEO HAS THE SLIDE NUMBER IN THE LOWER RIGHT-HAND CORNER.

THE COURT: NO. THIS IS MY DX 518. IT'S THE VIDEO.

MR. DEFRANCO: IT'S BOTH.

THE COURT: ALL RIGHT. YOU WANT TO MOVE IN 518?

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MR. DEFRANCO: YES, YOUR HONOR.

THE COURT: OKAY. THAT'S ADMITTED.

(WHEREUPON, DEFENDANT'S EXHIBIT NUMBER 518, HAVING BEEN PREVIOUSLY MARKED FOR IDENTIFICATION, WAS ADMITTED INTO EVIDENCE.)

THE COURT: AND THEN ALSO DX --

MR. DEFRANCO: 3951.007.

THE COURT: I THINK THAT'S .009.

MR. DEFRANCO: YES, .009 IS THE SLIDE WITH THIS VIDEO.

THE COURT: OH, AND YOU WANT TO MOVE IN .007?

MR. DEFRANCO: AND .007.

THE COURT: THAT'S FINE. THEY'RE BOTH ADMITTED.

(WHEREUPON, DEFENDANT'S EXHIBIT NUMBERS 3951.007, 3951.009, HAVING BEEN PREVIOUSLY MARKED FOR IDENTIFICATION, WERE ADMITTED INTO EVIDENCE.)

THE COURT: GO AHEAD, PLEASE.

BY MR. DEFRANCO:

Q: WE TALKED ABOUT THE CHI CONFERENCE, THE VIDEO THAT WAS PRESENTED.

DID THERE COME A TIME WHEN THERE WAS YET

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ANOTHER DEMONSTRATION OF LAUNCHTILE?

A: YES. SO A MONTH LATER, MAY OF 2005, OUR LAB AT THE UNIVERSITY OF MARYLAND HAD OUR CONFERENCE, WE PUT ON AN ANNUAL CONFERENCE, ABOUT 2- OR 300 PEOPLE, AND THEY CAME AND WE SHOWED -- WE GAVE A SIMILAR FORMAL PRESENTATION, AND THEN WE ALSO HAD A DEMO TIME FOR A FEW HOURS WHERE WE WOULD HAVE POSTERS, WE WOULD STAND AROUND THE POSTERS AND THE ATTENDEES COULD WALK AROUND, TALK TO US, AND AMY AND I WOULD HAND OUT THE DEVICES AND ENCOURAGE PEOPLE TO ACTUALLY TRY OUT LAUNCHTILE THEMSELVES.

Q: OKAY. AND THE LAUNCHTILE DEVICE AND THE CODE THAT WAS LOADED AT THAT TIME, DID THAT HAVE THE ZOOMING AND THE SNAP BACK FUNCTIONALITY THAT YOU SHOWED US IN THE VIDEOS?

A: OH, YES, DEFINITELY.

Q: AND WERE PEOPLE -- YOU SAID PEOPLE COULD LOOK AT THE DEVICE. DID YOU LET PEOPLE TAKE THE DEVICE AND PLAY WITH IT AND PLAY AROUND WITH THE FUNCTIONALITY AT THAT TIME?

A: YES, THEY COULD DO WHATEVER THEY WANTED WITH THE LAUNCHTILE.

Q: ANY RESTRICTIONS ON PEOPLE'S ABILITY TO DO THAT WHO ATTENDED THAT CONFERENCE?

A: NO.

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Q: SYMPOSIUM. WAS THAT A SYMPOSIUM OR A CONFERENCE?

A: WE CALLED IT A SYMPOSIUM. IT WAS A CONFERENCE.

Q: OKAY. AND THEN JUST SUMMARIZE FOR US REACTION. HOW DID PEOPLE REACT TO THE LAUNCHTILE FUNCTIONALITY THAT YOU SHOWED?

A: YOU KNOW, PEOPLE LOVED THIS STUFF. AT THE TIME WE WERE RUNNING ON THIS DEVICE, THIS MICROSOFT POCKET P.C. DEVICE WHICH WAS DESIGNED FOR TWO HANDS WHERE YOU'D USE A STYLUS TO SCROLL A TINY, TINY LITTLE SCROLL BAR AND, TO BE HONEST, IT WAS KIND OF FRUSTRATING.
SO WHEN WE WERE SHOWING THE FACT THAT YOU COULD NAVIGATE THIS RICH INFORMATION SPACE CASUALLY WITH ONE HAND, PEOPLE LIKED IT.

Q: AND JUST TO CONFIRM, DOCTOR, YOU'RE HERE AS A FACT WITNESS, NOT AS AN EXPERT FOR SAMSUNG, IS THAT CORRECT, IN THIS CASE?

A: THAT IS CORRECT.

MR. DEFRANCO: THANK YOU VERY MUCH.

THE COURT: ALL RIGHT. THE TIME IS NOW
3:31.

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CROSS-EXAMINATION

BY MR. JACOBS:

Q: GOOD AFTERNOON, SIR.

A: GOOD AFTERNOON.

Q: NOW, YOU ARE SERVING AS AN EXPERT FOR -- IN A DIFFERENT LAWSUIT AGAINST APPLE; CORRECT, SIR?

A: THAT IS CORRECT.

Q: AND YOU'VE OFFERED IN THAT CASE AN OPINION ON BEHALF OF AN APPLE COMPETITOR; RIGHT?

A: THAT IS CORRECT.

Q: NOW, IN LAUNCHTILE AND XNAV, THERE ARE THREE SEPARATE ZOOM LEVELS; TRUE?

A: THERE ARE -- YES, THERE ARE THREE ZOOM LEVELS AND YOU MOVE BETWEEN THEM AS I SHOWED IN THE VIDEOS.

Q: AND JUST TO GET THE NAMES OF THIS DOWN, IT'S THE WORLD VIEW, THE ZONE VIEW, AND THE APPLICATION VIEW; RIGHT?

A: THAT IS CORRECT.

Q: NOW, WHEN YOU'RE IN WORLD VIEW, YOU'RE LOOKING AT THE WHOLE WORLD THAT EXISTS ON THAT -- IN LAUNCHTILE; CORRECT?

A: THAT IS CORRECT. YOU CAN SEE THE WHOLE ZOOM SPACE, ALL 36 TILES.

Q: AND YOU CAN'T SCROLL AT ALL IN WORLD VIEW?

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A: NO. IT WAS DESIGNED WITH A FIXED SET OF
TILES, SO THERE WOULD BE NO REASON TO SCROLL.

Q: NOW, WHEN YOU'RE IN ZONE VIEWA: THAT IS CORRECT.

Q: YOU CAN SCROLL. TRUE?

A: YES, AS I SHOWED IN THE VIDEO, YOU CAN SCROLL OR PAN. I USE THOSE WORDS INTERCHANGEABLY TYPICALLY.

Q: AND YOU DESCRIBED THE SNAP BACK FUNCTIONALITY IN YOUR TESTIMONY A FEW MOMENT AGO. DO YOU RECALL THAT?

A: YES.

Q: AND THE WAY YOU IMPLEMENTED SNAP BACK WAS THAT IF A USER HAS DRAGGED MORE THAN ONE-SIXTH OF A SCREEN WIDTH, LAUNCHTILE WILL SNAP TO THE NEXT ZONE. TRUE, SIR?

A: YES, THAT SOUNDS RIGHT. WHEN THE USER IS DRAGGING THEIR FINGER, THERE'S A THRESHOLD, AND IF THEY DRAG MORE THAN THAT THRESHOLD, IT SNAPS FORWARD TO THE NEXT ZONE.

AND IF THEY'VE DRAGGED LESS THAN THAT THRESHOLD, IT SNAPS BACK TO THE ZONE THEY STARTED FROM.

Q: AND THE THRESHOLD IS THE ONE-SIXTH -- WE'LL

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CALL IT THE ONE-SIXTH CONDITION. TRUE, SIR?

A: YEAH, THE THRESHOLD IS ONE-SIXTH OF THE DIMENSION OF THE SCREEN THAT YOU'RE DRAGGING. SO IF YOU'RE DRAGGING HORIZONTALLY, IT WOULD BE ONE-SIXTH OF THE WIDTH. IF YOU'RE DRAGGING VERTICALLY, I BELIEVE IT WOULD BE ONE-SIXTH OF THE HEIGHT.

Q: SO LAUNCHTILE CODE ACTUALLY CONTAINS INSTRUCTIONS THAT MEASURE THE DISTANCE OF MOVEMENT AND THEN PERFORM THAT SNAPPING ANIMATION DEPENDING ON WHETHER THE ONE-SIXTH CONDITION IS SATISFIED. TRUE, SIR?

A: I THINK THAT SOUNDS RIGHT, THAT THE -- THE CONDITION IS BASED ON HOW FAR THE USER HAS DRAGGED.

Q: AND THE WAY IT WORKS, THOUGH, IS THAT IF YOU'RE AT THE LAST TILE IN ANY PARTICULAR DIRECTION, YOU CAN'T SCROLL PAST IT. TRUE, SIR?

A: WE HAD TO MAKE SURE THAT THE USER ALWAYS HAD A MECHANISM TO KNOW WHERE THEY WERE IN THE ZOOM SPACE AND PROVIDED DIFFERENT MECHANISMS FOR ENSURING GOOD EXPERIENCE AND AWARENESS.

SO WHEN -- THERE WAS -- WHEN YOU WERE AT DIFFERENT ZONES, THERE WERE DIFFERENT INDICATORS THAT TOLD YOU WHERE YOU WERE. WE ACTUALLY HAD SOME LITTLE BLUE DOTS, THESE LITTLE INDICATORS TO SHOW

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YOU WHERE YOU WERE IN A ZONE THAT WAS AT THE EDGE OF THE CONTENT, FAR EDGE, OR WHETHER YOU WERE IN THE MIDDLE.

SO IF YOU WERE IN THE MIDDLE, YOU WOULD SEE THAT YOU COULD GO FARTHER, YOU COULD GO FARTHER AND SNAP BACK.

IF YOU WERE AT THE FAR EDGE, THERE WOULD BE AN INDICATOR THAT YOU WERE AT THE FAR EDGE AND THEN THERE WOULD BE NO NEED TO GO PAST THAT.

Q: OKAY. SO WE'VE COVERED THREE DIFFERENT CASES AND I'D LIKE TO SHOW A VIDEO NOW AND SEE IF WE CAN EXPLAIN THIS TO THE JURY VIDEO -- VISUALLY. CAN WE SEE PDX 41.1, PLEASE.

(WHEREUPON, A VIDEOTAPE WAS PLAYED IN OPEN COURT OFF THE RECORD.)

BY MR. JACOBS:

Q: SO WHAT ARE WE LOOKING AT IN THE FIRST MOMENTS OF THIS VIDEO, DR. BEDERSON? WHAT VIEW ARE WE IN? WHAT VIEW ARE WE IN NOW?

A: NOW?

Q: YES.

A: THIS IS WHAT WE CALLED THE WORLD VIEW, THE ZOOMED OUT VIEW.

Q: OKAY. LET'S GO A FEW SECONDS INTO THAT.

(WHEREUPON, A VIDEOTAPE WAS PLAYED IN

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OPEN COURT OFF THE RECORD.)

BY MR. JACOBS:

Q: AND AS YOU SEE IN THAT VIEW -- YOU CAN STOP NOW -- YOU CAN'T SCROLL AT ALL; CORRECT?

A: THAT IS CORRECT. AS I EXPLAINED, THERE WOULD BE NO NEED FOR SCROLLING.

Q: OKAY. AND NOW LET'S SHOW THE ONE-SIXTH OF A SCREEN WIDTH CONDITION BEING SATISFIED OR NOT SATISFIED AND WE'LL SEE THE SNAP BACK.

(WHEREUPON, A VIDEOTAPE WAS PLAYED IN OPEN COURT OFF THE RECORD.)

BY MR. JACOBS:

Q: NOW, ACTUALLY WE'RE AT THE -- WE WERE AT THE EDGE JUST THEN, RIGHT, AND IT WOULDN'T GO ANY FURTHER; CORRECT, SIR?

A: YOU WERE AT THE FAR OUTSIDE EDGE OF THE CONTENT.

Q: SO YOU WOULDN'T PULL AWAY FROM THE EDGE AND SHOW SPACE, IT WOULD JUST STOP SCROLLING; CORRECT, SIR?

A: IF YOU CAN JUST STAY ON THAT VIDEO FRAME FOR JUST A SECOND, IT'S A LITTLE HARD TO SEE IN BETWEEN FRAMES, BUT YOU'LL SEE IN THAT SORT OF HOLE WHERE THE BLUE DOT, THE BLUE BUTTON IS NOT. ON THE RIGHT SIDE THERE ARE THOSE FIXED LITTLE BLUE DOTS, THAT'S

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AN INDICATOR THAT YOU CAN GO TO THE RIGHT. AND ON THE LEFT EDGE THERE AREN'T ANY INDICATORS.

SO YOU WOULD KNOW, THAT'S A VISUAL INDICATION THAT YOU WOULD HAVE NO NEED TO GO TO THE LEFT. SO THAT WAS THE FEEDBACK THAT I WAS TALKING ABOUT.

Q: SO LET'S GO BACK A FEW SECONDS IN THE VIDEO AND JUST LOOK AT THAT AGAIN.
SO AT 11 SECONDS, WE'RE IN WHAT VIEW,
SIR?

A: THIS IS THE ZONE VIEW.

Q: OKAY.

(WHEREUPON, A VIDEOTAPE WAS PLAYED IN OPEN COURT OFF THE RECORD.)

BY

MR. JACOBS:

Q: AND WE'RE AT THE LEFT EDGE, SO IT WOULDN'T GO ANY FURTHER; CORRECT?

A: THE FAR LEFT EDGE, THE OUTSIDE EDGE OF THE CONTENT.

Q: AND THAT'S TRUE AT EACH BOUNDARY; CORRECT? IF YOU'RE AT THE -- IF YOU'RE SHOWING ALL THE CONTENT AT THE BOTTOM THAT YOU CAN SEE, IT WON'T SCROLL UPWARDS ANY FURTHER; CORRECT, SIR?

A: IF YOU'RE AT THE BOTTOM-MOST, ONE OF THE BOTTOM-MOST ZONES AND YOU TRY AND SCROLL UP, IT

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WILL NOT SCROLL UP.

Q: AND THE SAME IS TRUE FOR RIGHT AND LEFT AND TOP. TRUE, SIR?

A: YES, ASSUMING YOU WOULD HAVE TO GO THROUGH ALL FOUR EXAMPLES.

Q: NOW, LET'S TALK ABOUT THE APPLICATION TILES.
THE APPLICATION VIEW, THAT'S THE VIEW WHERE YOU ACTUALLY HAVE TAPPED ON A TILE; CORRECT, SIR?

A: SO THAT'S THE DEEPEST OF THE THREE ZOOM LEVELS. YOU HAVE A ZONE AND YOU TAP ON A TILE, IT WILL BRING YOU INTO THE APPLICATION VIEW, I CALLED IT.

Q: AND WHAT YOU WERE TRYING TO EXPLAIN -- YOU WERE TRYING TO EXPLAIN THIS IDEA OF SEMANTIC ZOOMING IN YOUR EXAMINATION BY SAMSUNG'S COUNSEL. DO YOU RECALL THAT?

A: YES, I DO.

Q: AND THE IDEA WAS THAT WHEN YOU TAP ON AN APPLICATION TILE AND GO DEEPER INTO IT, YOU ACTUALLY SEE NEW CONTENT. TRUE, SIR?

A: IT WAS THE SAME TILE AND YOU WOULD SEE MORE INFORMATION ABOUT THAT TILE.

Q: AND WHEN YOU SAY MORE INFORMATION ABOUT THAT TILE, ARE YOU SEEING AN ENLARGEMENT OF THE TILE?

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HAS THE FONT GOTTEN BIGGER SO YOU CAN READ IT, OR ARE YOU SEEING AN UNDERLYING LEVEL OF DETAILED INFORMATION RELATED TO THAT TILE?

A: AS I EXPLAINED, THE WHOLE POINT OF SEMANTIC ZOOMING WAS TO HAVE DIFFERENT VISUAL REPRESENTATIONS AND TO SHOW MORE DETAILED INFORMATION AS YOU GOT LARGER, AS IT WAS ZOOMED IN. SO, YES, IT WOULD SHOW MORE DETAILED INFORMATION.

Q: SO LET'S TAKE A LOOK AT THAT. LET'S TAKE A LOOK AT PDX 41.2.

(WHEREUPON, A VIDEOTAPE WAS PLAYED IN OPEN COURT OFF THE RECORD.)

BY MR. JACOBS:

Q: SO, IN FACT, WE TAPPED ON -- ON THIS -- PAUSE IT, PLEASE.

WE TAPPED ON THAT PARTICULAR APPLICATION TILE AND THERE WAS NO MORE INFORMATION TO BE SEEN IN THAT PARTICULAR CASE; CORRECT, SIR?

A: YES. AS I EXPLAINED, THE PRIMARY
GOAL WAS TO EXPLORE THIS ZOOM SPACE AND WE DIDN'T BOTHER TO
FILL OUT THE ACTUAL IMPLEMENTATION OF THE DEEPEST LEVEL OF MANY OF THE TILES.

Q: AND THAT WAS FROM 5 SECONDS TO 12 SECONDS THAT WE JUST SAW. TRUE, SIR?

A: I DON'T REMEMBER EXACTLY WHERE YOU STARTED,

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BUT THAT SOUNDS ABOUT RIGHT.

Q: AND SO THE POINT THAT YOU'RE, THAT YOU WERE DRIVING AT IS WHEN THIS THING WAS FULLY FLESHED OUT, INSTEAD OF SEEING SOMETHING BLANK, YOU'D SEE MORE INFORMATION ABOUT THAT PARTICULAR APPLICATION?

A: CORRECT. I WOULD SAY MORE INFORMATION ABOUT THAT TILE IS THE TERM WE USED, AS YOU SAW IN THE -- I THINK I SHOWED THAT IN THE E-MAIL TILE IN THE VIDEO AND IN THE CONFERENCE VIDEO.

Q: LET'S TAKE A LOOK AT ANOTHER ONE. LET'S TAKE A LOOK AT THE CALENDAR APPLICATION. THIS WOULD BE PDX 41.2. THAT'S WHAT WE JUST SAW, CORRECT, SIR, WAS THAT CALENDAR?
I THINK YOU MAY HAVE TO GO BACK A LITTLE BIT FURTHER.
SO IT WAS CALENDAR WE TAPPED ON THERE; CORRECT, SIR?

A: YES.

Q: NOW LET'S GO TO PDX 41.1, AND LET'S LOOK AT THE E-MAIL APPLICATION FOR A MINUTE. SO LET'S GO TO 27 SECONDS ON THAT, PLEASE.

(WHEREUPON, A VIDEOTAPE WAS PLAYED IN OPEN COURT OFF THE RECORD.)

BY MR. JACOBS:

Q: NOW, THIS SHOWS A DIFFERENT FUNCTIONALITY.

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SAMSUNG'S COUNSEL DIDN'T ASK YOU ABOUT THIS IN YOUR DIRECT EXAMINATION, BUT I WANT TO MAKE SURE THAT THAT WAS INTENTIONAL, SO IF HE GETS UP AND SAYS "BEYOND THE SCOPE OF DIRECT," I'LL KNOW WHETHER THAT WAS TRUE OR NOT.
IN THE E-MAIL APPLICATION, THERE'S ALSO A SNAP BACK KIND OF FUNCTIONALITY, AN AUTO CENTERING
FUNCTION. TRUE, SIR?

A: YES, THERE IS.

Q: AND IN THAT AUTO CENTERING, YOU -- THE BLUE HIGHLIGHTER WILL MOVE UP AND DOWN BETWEEN THE E-MAIL HEADERS; CORRECT, SIR?

A: WELL, YOU ACTUALLY JUST, I THINK, COMBINED TWO DIFFERENT FEATURES. SO SINCE YOU ASKED ABOUT THAT, I BETTER TRY AND EXPLAIN IT.

IF YOU DRAG THAT BLUE BUTTON WITH THE PEN OR YOUR FINGER, WHAT YOU'LL SEE IS THAT BLUE HIGHLIGHT LINE WILL MOVE WITH IT, AND WHEN YOU LET GO, IT WILL ALIGN WITH THE NEAREST E-MAIL.

Q: SO LET'S --

A: I -- YOU DESCRIBED TWO DIFFERENT THINGS AND SO I WANTED TO CLARIFY. THAT WAS ONE OF THE FEATURES.
THE SECOND FEATURE IS THAT IF YOU DRAG THE E-MAIL LIST TO THE END OF THE CONTENT, TO THE END OF THE LIST, AND YOU DRAG IT PAST THE LAST

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E-MAIL, BUT NOT TOO FAR PAST, THEN IT WILL SNAP BACK IN A SIMILAR WAY TO WHAT YOU SAW WITH THE ZONES.

Q: SO LET'S TAKE A LOOK AT THAT, SIR.

(WHEREUPON, A VIDEOTAPE WAS PLAYED IN OPEN COURT OFF THE RECORD.)

BY MR. JACOBS:

Q: WE'RE AT 54 SECONDS ON THIS VIDEO, AND WE JUST SAW IT AUTO CENTER. CORRECT, SIR?

A: I THINK WE JUST SAW -- I THINK I PROBABLY WOULD HAVE CALLED IT ALIGNING THE BLUE HIGHLIGHT BAR WITH THE NEAREST E-MAIL, BUT --

Q: AND THAT'S WHAT THE CODE ACTUALLY DOES, RIGHT? IT LOOKS FOR WHAT'S THE NEAREST E-MAIL HEADER AND IT MOVES THE BLUE BAR TO THAT HEADER. TRUE, SIR?

A: THAT'S CORRECT.

Q: AND NOW LET'S -- DO WE HAVE VIDEO THAT SHOWS THE END?

(WHEREUPON, A VIDEOTAPE WAS PLAYED IN OPEN COURT OFF THE RECORD.)

BY MR. JACOBS:

Q: SO IT ACTUALLY GOES OFF INTO DESERT FOG, DOESN'T IT, SIR, IN THIS VIDEO?

A: SO I THINK THIS DOES EXACTLY HOW I EXPLAINED IT, WHICH IS IF YOU DRAG IT PAST THE END OF THE

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E-MAIL LIST NOT TOO FAR, IT WILL SNAP BACK. IF YOU DRAG IT TOO FAR, THEN IT WILL JUST STAY THERE.

Q: AND THE DEFINITION OF "TOO FAR," SIR?

A: THERE'S A -- IT HAS TO DO WITH HOW THE CODE IS IMPLEMENTED. IT DEPENDS WHERE THE PARTICULAR -- I MEAN, THERE'S A LOT OF DETAILS. IT DEPENDS EXACTLY WHERE THE BLUE HIGHLIGHT BAR IS. IF THE BLUE HIGHLIGHT BAR IS AT THE BOTTOM, THEN YOU CAN DRAG IT UP TO ONE, THE HEIGHT OF ONE E-MAIL, WHICH IS ABOUT 20 PIXELS.
IF THE BLUE BAR IS AT A DIFFERENT PLACE, THEN YOU CAN DRAG IT 10 PIXELS IN ORDER TO SEE THE SNAP BACK.

Q: SO IF YOU GO JUST ANOTHER COUPLE OF PIXELS, IT WON'T SNAP BACK; TRUE, SIR?

A: SO AS I SAID, THERE'S A THRESHOLD. IF YOU DRAG IT LESS THAN THAT THRESHOLD, IT WILL SNAP BACK. IF YOU DRAG IT MORE THAN THAT THRESHOLD, IT WILL NOT.

Q: SO WE CAN TAKE THAT DOWN NOW.

A COUPLE QUESTIONS ABOUT YOUR SPONSORSHIP. YOUR LAUNCHTILE WORK WAS SPONSORED BY MICROSOFT. TRUE, SIR?

A: MICROSOFT WAS SPONSORING MY RESEARCH IN GENERAL ON ZOOMABLE USER INTERFACES IN MOBILE

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DEVICES. THAT COVERED A NUMBER OF THINGS, AND IT INCLUDED THE DEVELOPMENT OF LAUNCHTILE.

Q: AND YOU WORKED WITH A MAN NAMED JOHN SANGIOVANNI AT MICROSOFT?

A: THAT IS CORRECT. I MENTIONED HIM BEFORE.

Q: AFTER COMPLETING THE CODE FOR LAUNCHTILE, YOU TRANSMITTED IT TO MR. SANGIOVANNI; CORRECT, SIR?

A: AT MICROSOFT, CORRECT.

Q: AND YOU DID SO IN ENCRYPTED FORM?

A: YES.

Q: AND THAT WAS BECAUSE YOU UNDERSTOOD THAT YOU WERE IN OBLIGATION TO KEEP LAUNCHTILE CONFIDENTIAL AND ASKED MR. SANGIOVANNI WHEN YOU COULD DISCUSS IT PUBLICLY. TRUE, SIR?

A: SO THERE'S A 30-PAGE CONTRACT COVERING THE AGREEMENT BETWEEN THE UNIVERSITY OF MARYLAND AND MICROSOFT AND THERE'S A LOT OF DETAILS, BUT I THINK WHAT YOU'RE GETTING AT IS PART OF THAT AGREEMENT IS THAT MICROSOFT HAD RIGHTS TO THE SOFTWARE WE DEVELOPED, AND AS PART OF THAT RIGHT, THEY HAD -- WE HAD AGREED THAT THEY WOULD HAVE SOME TIME TO KEEP THINGS CONFIDENTIAL WHILE THEY CONSIDERED WHAT THEY WERE GOING TO DO WITH IT, IF THEY WERE GOING TO LOOK AT SOME I.P. ISSUES.

AFTER SOME TIME PERIOD HAD ELAPSED AND WE

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HAD CLEARED THAT PROCESS, THEN THE UNIVERSITY OF MARYLAND WAS FREE TO -- WE OWNED THE SOFTWARE. WE COULD DO WHATEVER WE WANTED WITH IT.

SO I BELIEVE AT THE TIME OF THAT E-MAIL, I'M GUESSING I CAN -- I THINK -- I'M AWARE OF SOME E-MAIL, MAYBE IT'S THE SAME ONE THAT YOU'RE THINKING OF, THERE WAS SOME INTERACTION WHERE WE WERE DISCUSSING WHETHER WE HAD GONE THROUGH THAT PROCESS YET, WHETHER IT WAS YET TIME TO PUBLICLY DISCLOSE IT OR NOT.

THERE WAS A TIME WHEN IT WASN'T PUBLICLY DISCLOSED AND SO WE KEPT IT PRIVATE.

OBVIOUSLY BY THE TIME THE CONFERENCE ROLLED AROUND, AND ACTUALLY QUITE A WHILE BEFORE THEN, WE WERE FREE TO DO WHATEVER WE WANTED WITH IT. AND OF COURSE WE TALKED ABOUT IT AND SHOWED IT TO EVERYONE WE COULD. WE WERE QUITE PROUD OF IT.

Q: LET'S TALK ABOUT THAT, SIR. YOU MENTIONED THAT YOU PRESENTED LAUNCHTILE AT THE CHI CONFERENCE. YOUR PRESENTATION AT CHI DID NOT INCLUDE A DEMONSTRATION OF THE DEVICE WITH THE EXECUTABLE CODE LOADED ON IT; CORRECT?

A: THE PRESENTATION DIDN'T. BUT I WAS AT THE CONFERENCE FOR SIX DAYS. THIS IS MY MAIN PROFESSIONAL EVENT. I GO TO THIS CONFERENCE EVERY

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YEAR. I'VE BEEN GOING SINCE 1995. I'M A SOFTWARE DEVELOPER. I MAKE
USER
INTERFACES. SO WHAT I WOULD DO, MY SORT OF STANDARD PRACTICE IS I WOULD TRAP PEOPLE IN HALLWAY AND SAY, "HEY, LOOK WHAT I'M DOING, THIS COOL THING." AND I WOULD SHOW THEM -- YEAR IT WAS MY LAPTOP SOFTWARE OUT OF MY LAPTOP.

THIS YEAR I WAS DEVELOPING LAUNCHTILE ON A PDA, SO I WOULD HAND THEM THE PDA AND SAY, "HEY, LOOK WHAT I'M DOING."

I'M PRETTY SURE AMY KARLSON DID THE SAME
THING.

Q: YOU ALSO HOSTED A SECOND PUBLIC PRESENTATION AT A CONFERENCE HOSTED BY YOUR LAB. YOU TALKED ABOUT THAT IN YOUR DIRECT EXAMINATION. TRUE, SIR?

A: YES.

Q: AND YOU DON'T RECALL ANY SPECIFIC DEMONSTRATIONS YOU DID OF LAUNCHTILE AT THAT SYMPOSIUM IN MAY OF 2005. TRUE, SIR?

A: WELL, I REMEMBER SENDING --

Q: SIR, I'M ON A CLOCK. DO YOU REMEMBER ANY SPECIFIC DEMONSTRATION?

A: ARE YOU ASKING DO I REMEMBER THE INDIVIDUAL PERSON OF THE 200 PEOPLE I DIDN'T KNOW WHICH ONES I HANDED IT TO? THE ANSWER IS NO, I DO NOT.

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Q: AND DO YOU RECALL ANYTHING SPECIFICALLY BEING DEMONSTRATED IN MAY OF 2005 THAT WASN'T IN THE VIDEO THAT WE -- THAT THE JURY SAW IN YOUR DIRECT EXAMINATION?

A: AS I SAID, PEOPLE -- WE GAVE THE DEVICES TO PEOPLE. THEY WERE ENCOURAGED TO TRY IT OUT AND USE WHATEVER THEY WANTED TO. I COULDN'T EVEN ALWAYS SEE THE DEVICE AS THEY WERE USING IT.

SO DO I REMEMBER EXACTLY WHAT THEY DID? NO, I DO NOT.

Q: ISN'T IT TRUE THAT YOU DON'T RECALL THE SPECIFIC DETAILS OF WHAT WAS OR WAS NOT SHOWN TO ANY SPECIFIC INDIVIDUAL?

A: YOU MEAN -- AS I SAID, I ENCOURAGED THEM TO USE IT. I DO NOT KNOW EXACTLY WHAT THEY DID. I DON'T KNOW WHERE THEY CLICKED. I CERTAINLY DON'T KNOW WHAT PIXEL THEY CLICKED ON AND HOW THEY DRAGGED IT. SO NO.

MR. JACOBS: THANK YOU. NO FURTHER QUESTIONS.

THE COURT: ALL RIGHT. THE TIME IS 3:48. GO AHEAD, PLEASE.

REDIRECT EXAMINATION

BY MR. DEFRANCO:

Q: YOU WERE ASKED ABOUT A COUPLE OF E-MAILS,

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DOCTOR. I THINK THERE MAY HAVE BEEN CONFUSION OR CONFLATING WHAT WAS IN THE TWO E-MAILS. I WANT TO PUT ONE UP ON THE SCREEN THAT WAS MARKED AS A CROSS EXHIBIT, IT'S EXHIBIT 2227.

IF WE CAN BLOW THAT UP, RYAN.

YOU WERE ASKED ABOUT ENCRYPTION, SEND CODE TO MICROSOFT. THEY ASKED YOU THAT IT BE ENCRYPTED; IS THAT RIGHT? IS THIS THE E-MAIL YOU'RE TALKING ABOUT?

A: THAT'S THE ONE I WAS THINKING OF.

Q: WHAT'S THE DATE OF THAT E-MAIL?

A: OH, THIS IS LATER. THIS IS AUGUST OF 2005. SO THIS IS LONG AFTER WE HAD PUBLICLY DISCLOSED THE INTERACTION.

Q: PUBLICLY DISCLOSED LAUNCHTILE?

A: CORRECT.

Q: EARLIER IN 2005; RIGHT?

A: YES.

Q: THIS LATER REQUEST BY MICROSOFT THAT YOU SEND SOURCE CODE IN ENCRYPTION FORM, WAS THAT, IN YOUR UNDERSTANDING, IN ANY WAY ATYPICAL FOR MICROSOFT'S PRACTICE?

A: I'M NOT 100 PERCENT SURE, BUT I THINK THIS MAY HAVE BEEN IN RESPONSE TO THEIR REQUEST.

Q: AND IN TERMS OF ENCRYPTION, DO YOU HAVE ANY

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EXPERIENCE?

A: THE ENCRYPTION I THINK WAS IN RESPONSE TO THEIR REQUEST.

Q: YOU WERE ASKED ABOUT AN EARLIER E-MAIL IN SEPTEMBER '04. DO YOU REMEMBER THAT?

A: YES, I BELIEVE THAT WAS ONE.

Q: AND YOU WERE ASKED, WAS THERE AN E-MAIL IN THAT TIMEFRAME TO KEEP INFORMATION CONFIDENTIAL ABOUT LAUNCHTILE; IS THAT CORRECT?

A: YES.

Q: BUT AFTER THAT E-MAIL -- WAS THAT REQUEST THAT LAUNCHTILE NOT BE DISCLOSED PUBLICLY, WAS THAT LIFTED, SIR?

A: YES. AS I SAID, THERE WAS A PROCESS WE WENT THROUGH. WE WENT THROUGH IT, IT DIDN'T TAKE VERY LONG, AND THEN WE WERE FREE TO DO WHATEVER WE WANTED WITH ANY OF THE TECHNOLOGY.

Q: OKAY. VERY BRIEFLY, YOU WERE ALSO SHOWN SOME E-MAIL FUNCTIONALITY AND SHOWING THE WHITE SCREEN.
WHAT -- WAS THE E-MAIL FUNCTIONALITY, DID
YOU INTEND FOR THAT TO BE COMPLETED IN LAUNCHTILE AT THIS POINT IN TIME?

A: NO. IN FACT, THE E-MAIL APPLICATION WAS NOT EVEN FULLY FUNCTIONAL. YOU COULD NOT SEND OR RECEIVE E-MAILS. IT WAS REALLY JUST A

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DEMONSTRATION OF WHAT AN E-MAIL SYSTEM MIGHT FEEL LIKE. THE MAIN GOAL WAS TO SHOW THE ZOOMING AND THE PANNING AND THE SNAPPING AND ALL THAT KIND OF NAVIGATION.

Q: OKAY. AND THEN BOUNCE BACK, YOU WERE ASKED ABOUT BOUNCE BACK, SNAP BACK. THE SNAP BACK FUNCTIONALITY WAS USED IN LAUNCHTILE TO GO FROM WHERE TO WHERE, SIR?

A: PRIMARILY FROM ZONE TO ZONE.

Q: WAS IT USED ONCE YOU GOT TO THE EDGE WHERE THERE WERE NO MORE ZONES?

A: NO. IT WAS NOT NECESSARY AT THAT POINT.

Q: DID YOU USE SOMETHING ELSE?

A: YES. AS I EXPLAINED EARLIER, WE HAD THOSE BLUE INDICATORS THAT GAVE THE USER INFORMATION SO THEY KNEW THAT THERE WAS NO POINT IN GOING PAST THERE.

Q: COULD YOU HAVE USED SNAP BACK AT THE EDGE, AND IF SO, WHY DON'T YOU?

MR. JACOBS: OBJECTION, YOUR HONOR. LEADING AND ASKS FOR EXPERT TESTIMONY AND HYPOTHETICAL.

THE COURT: SUSTAINED.

MR. DEFRANCO: THANK YOU VERY MUCH.

MR. JACOBS: YOUR HONOR, VERY BRIEFLY.

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THE COURT: GO AHEAD. THE TIME IS 351. GO AHEAD.

MR. JACOBS: I'D LIKE TO OFFER INTO
EVIDENCE 2227.

THE COURT: ANY OBJECTION?
MR. DEFRANCO: NO, YOUR HONOR, NO OBJECTION.

THE COURT: OKAY.

(WHEREUPON, PLAINTIFF'S EXHIBIT NUMBER 2227, HAVING BEEN PREVIOUSLY MARKED FOR IDENTIFICATION, WAS ADMITTED INTO EVIDENCE.)

MR. JACOBS: AND I'D LIKE TO OFFER INTO EVIDENCE THE TWO VIDEOS WE SAW, PDX 41.1 AND PDX 41.2.

THE COURT: THEY'RE ADMITTED.

(WHEREUPON, PLAINTIFF'S EXHIBIT NUMBERS 41.1 AND 41.2, HAVING BEEN PREVIOUSLY MARKED FOR IDENTIFICATION, WERE ADMITTED INTO EVIDENCE.)

MR. JACOBS: THANK YOU, YOUR HONOR.

THE COURT: MAY THIS WITNESS BE EXCUSED -- I'M SORRY. GIVE ME THE NUMBER AGAIN OF THE E-MAIL.

MR. JACOBS: THAT WAS 2227.

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THE COURT: ALL RIGHT. MAY THIS WITNESS BE EXCUSED OR IS IT SUBJECT TO RECALL?

MR. VERHOEVEN: I THINK THE WITNESS MAY BE EXCUSED. HE'S A THIRD PARTY, YOUR HONOR.

THE COURT: OKAY. YOU ARE EXCUSED. CALL YOUR NEXT WITNESS, PLEASE.

MR. JOHNSON: YOUR HONOR, SAMSUNG CALLS
ADAM BOGUE.

THE CLERK: PLEASE RAISE YOUR RIGHT HAND.

ADAM BOGUE,

BEING CALLED AS A WITNESS ON BEHALF OF THE
DEFENDANT, HAVING BEEN FIRST DULY SWORN, WAS EXAMINED AND TESTIFIED AS FOLLOWS:

THE WITNESS: I DO.

THE CLERK: THANK YOU. PLEASE BE SEATED.

DIRECT EXAMINATION

BY MR. JOHNSON:

Q: GOOD AFTERNOON, MR. BOGUE.

A: GOOD AFTERNOON.

Q: DO YOU HAVE AN UNDERSTANDING OF WHY YOU'RE BEING CALLED TO TESTIFY TODAY?

A: YES. I'VE BEEN ASKED TO TALK ABOUT THE DIAMONDTOUCH TABLE.

Q: BEFORE WE TALK ABOUT THE DIAMONDTOUCH, CAN YOU PLEASE DESCRIBE FOR US, GIVE US A LITTLE BIT OF

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BACKGROUND ON YOUR EDUCATION.

A: YES. I HAVE AN UNDERGRADUATE DEGREE FROM M.I.T. IN MATERIAL SCIENCE ENGINEERING; AND AN M.B.A. FROM M.I.T. SLOAN SCHOOL OF BUSINESS.

Q: WHAT'S YOUR OCCUPATION?

A: I'M THE PRESIDENT OF CIRCLE TWELVE, A COMPANY THAT I FOUNDED IN 2008, AND WE'RE THE MAKER OF THE DIAMONDTOUCH TABLE.

Q: WHERE DID YOU WORK BEFORE CIRCLE TWELVE?

A: BEFORE CIRCLE TWELVE, I WAS AT MITSUBISHI ELECTRIC RESEARCH LABS, OR MERL, AND MERL IS WHERE DIAMONDTOUCH WAS FIRST INVENTED BACK IN 2001.

Q: WHERE IS MERL LOCATED?

A: 201 BROADWAY IN CAMBRIDGE, MASSACHUSETTS.

Q: AND WHEN DID YOU START AT MERL?

A: IN 2000.

Q: NOW, WHEN YOU STARTED AT MERL, WHAT WERE YOUR RESPONSIBILITIES? WHAT WAS YOUR TITLE THERE?

A: I WAS THE VICE-PRESIDENT OF MARKETING AND BUSINESS DEVELOPMENT, AND MY RESPONSIBILITIES WERE TO FIND BUSINESS OPPORTUNITIES FOR THE TECHNOLOGY THAT WAS DEVELOPED AT MERL BY THE RESEARCHERS THERE.

Q: OKAY. AND NOW YOU MENTIONED DIAMONDTOUCH. CAN YOU TELL ME, WHAT WAS DIAMONDTOUCH, OR WHAT IS

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DIAMONDTOUCH?

A: SO DIAMONDTOUCH IS A TABLETOP COMPUTER INTERFACE THAT'S DESIGNED FOR SUPPORTING SMALL GROUP, FACE-TO-FACE COLLABORATION.

Q: YOU HAVE A BINDER IN FRONT OF YOU, A BLACK
BINDER THAT HAS SOME EXHIBITS IN IT. AND I'M GOING TO ASK YOU, CAN YOU TURN TO DX 696, PLEASE?

A: SORRY.

Q: LET ME KNOW WHEN YOU GET THERE.

A: BLACK BINDER?

Q: IT SHOULD BE BLACK, A BLACK BINDER WITH THE NUMBER 696.

A: 696. I'M SORRY. I'M SORRY. I GOT IT.

Q: ALL RIGHT. AND IN PARTICULAR, I WANT TO DIRECT YOUR ATTENTION TO PAGE 3, SO 696.003.

A: YES.

Q: DO YOU SEE A PHOTOGRAPH ON THAT PAGE IN THE UPPER LEFT-HAND CORNER?

A: YES. THIS IS A PHOTOGRAPH OF THE DIAMONDTOUCH TABLE AS IT EXISTED IN THE LOBBY AT MITSUBISHI ELECTRIC RESEARCH LABS. THAT'S A PICTURE OF ME ON THE LEFT THERE.

MR. JOHNSON: YOUR HONOR, IF WE MAY, I'D LIKE TO MOVE TO ADMIT EXHIBIT 696.

THE COURT: ANY OBJECTION?

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MR. JACOBS: NO OBJECTION, YOUR HONOR.

THE COURT: IT'S ADMITTED.

(WHEREUPON, DEFENDANT'S EXHIBIT NUMBER 696, HAVING BEEN PREVIOUSLY MARKED FOR IDENTIFICATION, WAS ADMITTED INTO EVIDENCE.)

MR. JOHNSON: IF WE MAY PUBLISH THIS TO THE JURY?

THE COURT: PLEASE, GO AHEAD.

MR. JOHNSON: THANK YOU.

Q: SO YOU MENTIONED DIAMONDTOUCH IS A TABLE TOUCHSCREEN. CAN YOU TELL US WHAT YOU MEAN BY THAT?

A: YES. SO WHAT YOU'RE LOOKING AT THERE IN THE PICTURE IS A TABLETOP TOUCHSCREEN. IT'S A RECTANGULAR TOUCHSCREEN, AND IT'S DESIGNED TO SUPPORT SMALL GROUP FACE-TO-FACE COLLABORATION. SO THE FOUR PEOPLE SITTING AT THAT TABLE, WE CAN ALL INTERACT USING MULTITOUCH GESTURES.

WHAT YOU DON'T SEE IN THE TABLE -- IN THIS PICTURE IS ABOVE THERE'S A PROJECTOR AIMED DOWN AND SO THE IMAGE IS PROJECTED FROM ABOVE, AND BEHIND IT IS A P.C. AND TOGETHER THAT'S ALL DIAMONDTOUCH.

Q: OKAY. NOW, COULD DIAMONDTOUCH BE USED WITH A

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SINGLE USER?

A: YES. INDEED, I USE DIAMONDTOUCH IN MY DAY-TO-DAY WORK AND HAVE SINCE 2004, 2005. I DO EVERYTHING ON IT. IF YOU HAVE AN E-MAIL FROM ME, IT COMES FROM THE DIAMONDTOUCH TABLE IN MY OFFICE.

Q: NOW, WHEN WAS DIAMONDTOUCH DEVELOPED?

A: IN 2001 AT MERL.

Q: WERE YOU INVOLVED IN THE DEVELOPMENT OF DIAMONDTOUCH?

A: SO I WAS ON THE TEAM. I DID SOME SOFTWARE TESTING.
BUT MY PRINCIPAL RESPONSIBILITY WAS THE
BUSINESS DEVELOPMENT PERSON. SO I WAS SHOWING DIAMONDTOUCH TO PEOPLE OUTSIDE OF MERL.

WHEN WE HAD VISITORS THAT CAME TO MERL, I WOULD DEMO THE DIAMONDTOUCH TABLE IN THE LOBBY THERE.

I ALSO HAD A SYSTEM THAT I WOULD BRING ON THE ROAD TO CUSTOMER SITES, AND I WENT TO A LOT OF TRADE SHOWS AND OTHER PUBLIC EVENTS.

Q: OKAY. NOW, CAN YOU RUN PROGRAMS ON DIAMONDTOUCH?

A: YEAH. IN FACT, ONE OF THE NICE THINGS ABOUT DIAMONDTOUCH IS ANY WINDOWS SOFTWARE WORKS ON IT.

IN THIS TIME PERIOD WHEN THIS PHOTO WAS

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TAKEN, 2004/2005 TIMEFRAME, WE WERE DEVELOPING A LOT OF DEMONSTRATION APPLICATIONS TO ILLUSTRATE TO USERS WHAT YOU COULD DO WITH MULTITOUCH AND MULTIUSER TOUCH. SO THERE WERE A LOT OF DEMOS SPECIFICALLY DESIGNED FOR DIAMONDTOUCH.

Q: AND WHEN WAS THIS PHOTOGRAPH TAKEN?

A: IN 2004.

Q: HOW DO YOU KNOW THAT?

A: WELL, I REMEMBER THE PHOTO BEING TAKEN. ALSO, LOOKING AT THE APPLICATION THERE, THAT'S FROM 2004.
I ALSO USE THIS AS A PRESS PIECE. I WOULD SEND THIS TO PEOPLE WHO ASKED ABOUT DIAMONDTOUCH.

Q: WHAT TECHNOLOGY IS USED TO DETECT USER TOUCH ON THE TOUCHSCREEN?

A: SO IT'S CAPACITIVE, VERY SIMILAR TO MOBILE DEVICES TODAY. THERE'S A GRID OF TRANSMITTERS IN THE TOUCH SURFACE, AND WHEN YOU TOUCH IT, YOU'RE CAPACITIVELY COUPLED TO THAT, THOSE SIGNALS.

Q: DID ANYBODY OUTSIDE OF MITSUBISHI USE DIAMONDTOUCH?

A: YEAH. SO WE -- IN THIS TIME PERIOD, 2003/2004, WE MADE ABOUT 100 OF THESE AND LENT OR GAVE THEM AWAY TO MOSTLY UNIVERSITY RESEARCH GROUPS AROUND THE WORLD, YOU KNOW, STANFORD, BERKELEY,

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THEY ALL HAD DIAMONDTOUCH TABLES AND THEY WERE ALL DEVELOPING APPLICATIONS FOR THEM.

Q: WHEN DID YOU FIRST START DEMONSTRATING DIAMONDTOUCH SYSTEM TO PEOPLE OUTSIDE OF MERL?

A: THE FIRST TIME I SHOWED DIAMONDTOUCH OUTSIDE OF MERL WAS IN THE SUMMER OF 2003. I BROUGHT IT TO APPLE HEADQUARTERS AND SHOWED IT TO THE HARDWARE ENGINEERS THERE.

Q: AND WHO DID YOU FIRST DEMONSTRATE THE DIAMONDTOUCH SCREEN SYSTEM TO?

A: SO IT WAS -- IT WAS A TEAM OF HARDWARE ENGINEERS, AND I REMEMBER JOSH STRICKEN AND STEVE HOTELLING, THOSE TWO NAMES STICK IN MY MIND. THERE WERE OTHERS IN THE ROOM, I THINK MAYBE A HALF A DOZEN.

Q: CAN I DIRECT YOUR ATTENTION TO EXHIBIT 695 IN YOUR BINDER. AND TELL ME -- BEFORE YOU PUT IT UP -- DO YOU RECOGNIZE WHAT THAT IS, PLEASE?

A: YES. THIS IS AN E-MAIL THAT -- IT'S FROM ME AND IT'S TO STEVE HOTELLING FROM APPLE. THIS IS FROM 2003.

MR. JOHNSON: YOUR HONOR, WE WOULD ASK THAT THIS EXHIBIT 695 BE ADMITTED.

THE COURT: IT'S ADMITTED.

(WHEREUPON, DEFENDANT'S EXHIBIT NUMBER

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695, HAVING BEEN PREVIOUSLY MARKED FOR IDENTIFICATION, WAS ADMITTED INTO EVIDENCE.)

MR. JOHNSON: WILL YOU PUBLISH IT, PLEASE, RYAN?

Q: NOW, DO YOU SEE THE DATE ON THIS E-MAIL THREAD?

A: YES. SO IT'S AN E-MAIL THREAD. THE DATE AT THE TOP IS NOVEMBER 6TH, 2003. THERE'S ANOTHER ITEM IN THE THREAD BELOW, IT SAYS OCTOBER 23RD, 2003. AND THEY BOTH ARE FOLLOW-UP E-MAILS TO THE MEETING THAT I HAD PREVIOUS IN THE YEAR.

Q: AND WHERE DOES THIS E-MAIL COME FROM?

A: FROM MY FILES.

Q: NOW, DO THESE E-MAILS REFER TO THE MEETING AT APPLE THAT YOU TALKED ABOUT EARLIER?

A: YEAH. IT SAYS "A FEW MONTHS AGO, I MET YOU AND JOSH." AND SO, YES, IT REFERS TO THAT MEETING.

Q: OKAY. NOW, WHEN YOU MET WITH APPLE TO SHOW THE DIAMONDTOUCH SYSTEM, DID YOU REQUIRE APPLE TO SIGN SOME SORT OF CONFIDENTIALITY AGREEMENT BEFORE SHOWING THEM THE DIAMONDTOUCH SYSTEM?

A: NO. IN FACT, I WAS ASKED TO SIGN AN AGREEMENT THAT SAID ANYTHING THAT I SHOW SHOULD NOT BE CONFIDENTIAL.

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Q: AND WHO ASKED YOU TO SIGN THAT AGREEMENT?

A: I WAS ASKED BY SOMEONE AT APPLE.

Q: AND DID YOU SIGN THAT AGREEMENT?

A: YES.

Q: NOW, ARE YOU FAMILIAR OF A PROGRAM THAT RAN ON DIAMONDTOUCH CALLED FRACTAL ZOOM?

A: YES.

Q: AND WHAT'S THAT?

A: SO FRACTAL ZOOM WAS ACTUALLY ONE OF THE CORE DEMOS THAT I WOULD SHOW TO DEMONSTRATE THE DIAMONDTOUCH TABLE AND THE MULTIUSER, MULTITOUCH ASPECTS OF IT.
IT'S ACTUALLY, I THINK I -- I PREPARED A VIDEO THAT MAYBE WE CAN SHOW.

Q: OKAY.

YOUR HONOR, MAY WE PLAY THE VIDEO? IT'S 3952.101.

THE COURT: GO AHEAD, PLEASE.

(WHEREUPON, A VIDEOTAPE WAS PLAYED IN OPEN COURT OFF THE RECORD.)

BY MR. JOHNSON:

Q: NOW, MR. BOGUE, CAN YOU EXPLAIN WHAT WE SEE HERE?

A: YEAH. THIS IS THE DIAMONDTOUCH. YOU KIND OF SEE A FRAME THERE, THAT RECTANGULAR SCREEN, THAT'S

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THE DIAMONDTOUCH TABLE.

Q: THAT'S THE BLACK FRAME HERE?

A: YEAH. AND THIS IS SOMETHING WE CALLED THE APP LAUNCHER, SO APP LAUNCHER WAS SOMETHING THAT YOU COULD HAVE APPS, AND IF YOU TOUCH ON THEM, THAT WOULD LAUNCH THE APP.
THERE IS FOUR APPS ON THIS SCREEN, AND THIS IS THE CORE SET OF DEMOS THAT I SHOWED IN THE 2004/2005 TIME FRAME.

AND THE ONE ON THE RIGHT THAT HE'S ABOUT TO TOUCH ON IS, IS FRACTAL ZOOM. I CALLED IT MANDELBROT. HE'S THE MATHEMATICIAN THAT SORT OF DEVELOPED FRACTALS. SORRY.

Q: DO FRACTAL ZOOM AND MANDELBROT REFER TO THE SAME THING AS FAR AS DIAMONDTOUCH IS CONCERNED?

A: YES.

Q: SO WHAT DO WE SEE NEXT IN THE VIDEO?

A: OKAY. SO WHEN HE TOUCHES ON THAT ICON -- I DON'T KNOW IF YOU CAN RUN THIS. OKAY. SO THAT LAUNCHED THE APPLICATION.

(WHEREUPON, A VIDEOTAPE WAS PLAYED IN OPEN COURT OFF THE RECORD.)

THE WITNESS: YOU'LL SEE HERE THERE'S A COPYRIGHT 2004, SO THAT'S WHEN FRACTAL ZOOM WAS FIRST DEVELOPED.

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AND IF WE KEEP RUNNING, THERE'S INSTRUCTIONS ON HOW IT WORKS.

MR. JOHNSON: AND CAN WE PAUSE IT HERE JUST FOR A SECOND, PLEASE, RYAN?

THE WITNESS: SO HERE IT TELLS YOU TWO FINGERS TO ZOOM IN, TWO FINGERS TO ZOOM OUT, AND ONE FINGER TO GRAB OR PULL THE IMAGE TO MOVE THE IMAGE AROUND.

BY MR. JOHNSON:

Q: AND WHAT WAS BEING DESCRIBED THERE?

A: THIS IS -- THIS IS THE INSTRUCTIONS ON HOW TO RUN THE DEMO.

Q: OKAY. AND WHAT DO WE SEE NEXT IN THE VIDEO?

A: YOU'LL SEE SOMEBODY OPERATING IT.

MR. JOHNSON: CAN WE PRESS PLAY.

(WHEREUPON, A VIDEOTAPE WAS PLAYED IN OPEN COURT OFF THE RECORD.)

THE WITNESS: SO THERE'S ONE FINGER, IT MOVES. AND NEXT YOU'LL SEE TWO FINGERS AND YOU CAN ZOOM OUT OR ZOOM IN.

(WHEREUPON, A VIDEOTAPE WAS PLAYED IN OPEN COURT OFF THE RECORD.)

THE WITNESS: SO IT'S -- IT'S KIND OF SIMPLE IN ITS OPERATION, BUT WHAT I LIKED ABOUT FRACTAL ZOOM IS THAT IT WAS KIND OF EYE CATCHING

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WHEN YOU SHOWED IT TO PEOPLE, AND ALSO IT ILLUSTRATED THE MULTITOUCH ASPECTS OF THE HARDWARE.

BY MR. JOHNSON:

Q: AND WHEN WAS FRACTAL ZOOM FIRST DEMONSTRATED TO PEOPLE?

A: SO IT WAS IN THE MID TO LATE 2004 TIME PERIOD. WE LOADED IT INTO THE SYSTEM ON THE LOBBY IN MERL. THAT'S THE FIRST PLACE WE ALWAYS SHOWED THINGS. WE KIND OF HAD A POLICY OF THE RESEARCHERS WOULD LOAD IN THE LATEST NEW DEMOS ON TO THAT LOBBY MACHINE.
AND THEN AFTER THAT I STARTED BRINGING IT ON THE ROAD ON THE TRAVELLING SYSTEM THAT I BROUGHT OUT.

Q: HOW MANY TIMES WOULD YOU ESTIMATE THAT YOU'VE PUBLICLY SHOWN FRACTAL ZOOM IN THE 2004/2005 TIME FRAME?

A: IT WAS -- IT WAS LITERALLY THOUSANDS BECAUSE I WAS ON THE ROAD A LOT AT TRADE SHOWS AND PUBLIC EVENTS AND THIS WAS ONE OF THE CORE DEMOS THAT I SHOWED.

Q: AND CAN YOU DESCRIBE FOR US WHERE IT WAS PUBLICLY DEMONSTRATED.

A: YEAH. SO THERE WAS NEXT BEST, WHICH WAS SPONSORED BY WIRED MAGAZINE; THERE WAS GEOINT; THERE WAS -- THAT WAS A TRADE SHOW, AFCEA WEST,

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WHICH WAS IN SAN DIEGO; THERE WAS A CONFERENCE CALLED SID, SOCIETY FOR INFORMATION DISPLAY, THAT WAS IN BOSTON.

THERE WERE ALSO SOME INDIVIDUAL DEMONSTRATIONS. I BROUGHT IT TO THE NEW SCHOOL IN NEW YORK CITY. THERE WAS AN EVENT CALLED CWID, SO -- AND I WAS ON THE ROAD A LOT SHOWING DIAMONDTOUCH BACK IN THAT PERIOD OF TIME.

Q: AND THE CONFERENCES THAT YOU JUST REFERRED TO, THE CWID, GEOINT, DID THOSE OCCUR -- WHAT YEAR DID THOSE OCCUR IN WHEN YOU FIRST PUBLICLY DEMONSTRATED FRACTAL ZOOM?

A: SO GEOINT WAS OCTOBER, NOVEMBER 2004. AFCEA WEST WAS JANUARY 2005. SID WAS MAY 2005.

Q: OKAY.

A: I CAN KEEP GOING.

Q: SO WAS FRACTAL ZOOM OFFERED FOR SALE OR SOLD AS PART OF THE DIAMONDTOUCH SYSTEM IN 2005?

A: SO WE -- WE DIDN'T SELL IT SEPARATELY. IT WAS INCLUDED IN THE PRODUCT. SO IF YOU BOUGHT A DIAMONDTOUCH TABLE, IT CAME WITH DEMONSTRATION SOFTWARE AND THAT WAS, THAT WAS INCLUDED.
SO THIS, YES, THIS WAS INCLUDED IN THE PRODUCT THAT WE SOLD.

Q: CAN I TURN YOUR ATTENTION TO DX 661 IN YOUR

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BINDER, PLEASE. AND CAN YOU TELL US WHAT THAT IS?

A: YES. THIS IS A PRICE LIST FOR DIAMONDTOUCH AND PRODUCT OPTIONS. THIS IS -- I PREPARED THIS PRICE LIST BACK IN OCTOBER 2000 -- OCTOBER 25TH, 2005. I CAN SEE THE DATE IN THE LOWER RIGHT-HAND CORNER.

(WHEREUPON, DEFENDANT'S EXHIBIT NUMBER 661, HAVING BEEN PREVIOUSLY MARKED FOR IDENTIFICATION, WAS ADMITTED INTO EVIDENCE.)

MR. JOHNSON: AND YOUR HONOR, I ALSO ASK THAT SDX 3952.101, WHICH IS THE DIAMONDTOUCH VIDEO WE JUST LOOKED AT, ALSO BE ADMITTED.

MR. JACOBS: NO OBJECTION.

THE COURT: IT'S ADMITTED.

(WHEREUPON, DEFENDANT'S EXHIBIT NUMBER 3952.101, HAVING BEEN PREVIOUSLY MARKED FOR IDENTIFICATION, WAS ADMITTED INTO EVIDENCE.)

BY MR. JOHNSON:

Q: SO GOING TO THE PRICE LIST, MR. BOGUE, CAN YOU

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TELL US WHAT THIS SHOWS?

A: WE HAD TWO DIFFERENT MODELS OF DIAMONDTOUCH, DT81 AND DT107, SO BASICALLY TWO DIFFERENT SIZES. WHAT THE PRICE LIST SHOWS IS WHAT'S INCLUDED IN THE PRODUCT AND THE PRICE.

Q: OKAY. NOW, HOW DO YOU KNOW THAT FRACTAL ZOOM WAS INCLUDED IN THE PRICING STRUCTURE HERE?

A: OKAY. SO THE LAST BULLET IN THE LIST OF WHAT'S INCLUDED SAYS DT DEMONSTRATION SOFTWARE APPLICATIONS, AND THAT REFERS TO THE -- THAT CORE SET OF DEMOS THAT I HAD SHOWN.

Q: AND FRACTAL ZOOM WAS INCLUDED AS DT DEMONSTRATION SOFTWARE?

A: THAT'S CORRECT.

Q: WHAT DID DT DEMONSTRATION SOFTWARE REFER TO?

A: SO IT INCLUDED THE APP LAUNCHER, THOSE FOUR DEMOS, DT BOXES, DT LENS, MANDELBROT, AND POP-A-BUBBLE, WHICH WAS A GAME. AND THAT'S IN THE OCTOBER 2005 TIME PERIOD.
WE HAD OTHER DEMOS THAT WERE ALSO
PROVIDED.

Q: WHAT'S THE DATE OF THIS PRICE LIST?

A: OCTOBER 25TH, 2005.

Q: AND HOW DO YOU KNOW THAT?

A: IT'S IN THE LOWER RIGHT-HAND CORNER.

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Q: OKAY. AND WHO CREATED THIS PRICE LIST?

A: I DID.

Q: DID YOU PROVIDE THE PRICE LIST TO ANYBODY IN 2005?

A: YES. ANYONE WHO WANTED TO BUY A DIAMONDTOUCH TABLE, I WOULD GIVE THEM THE PRICE LIST.

Q: OKAY. LET'S LOOK AT EXHIBIT DX 662.

A: YES.

Q: CAN YOU TELL US WHAT THIS IS?

A: THIS IS A PURCHASE ORDER FROM SAIC. THEY BOUGHT A DIAMONDTOUCH TABLE. THE DATE OF THIS PURCHASE ORDER IS DECEMBER 12TH, 2005.

MR. JOHNSON: YOUR HONOR, WE'D ASK THAT DX 662 BE ADMITTED.

MR. JACOBS: NO OBJECTION.

THE COURT: IT'S ADMITTED.

(WHEREUPON, DEFENDANT'S EXHIBIT NUMBER 662, HAVING BEEN PREVIOUSLY MARKED FOR IDENTIFICATION, WAS ADMITTED INTO EVIDENCE.)

BY MR. JOHNSON:

Q: NOW, WAS THE PRICE LIST PROVIDED TO SAIC BEFORE THIS PARTICULAR PURCHASE ORDER?

A: YES. I GAVE THE PRICE LIST TO BILL GUNTHER, WHO'S THE BUYER AT SAIC.

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Q: WHAT DOES EXHIBIT 662 SHOW US?

A: SO THIS SHOWS THAT THEY PURCHASED A DIAMONDTOUCH TABLE. THERE'S THREE PAGES HERE. THE NEXT PAGE IS AN INVOICE, THAT'S THE INVOICE THAT WE SENT AFTER WE SHIPPED. AND THEN THE NEXT PAGE IS THE CHECK THAT SHOWS THAT THEY PAID.

Q: OKAY. WAS FRACTAL ZOOM INCLUDED AS PART OF THIS PURCHASE ORDER?

A: IT WAS. I REMEMBER THIS BECAUSE THIS WAS ONE OF OUR FIRST SALES, AND I ACTUALLY TRAVELED TO ARREST LINK TON VIRGINIA TO HELP SET THINGS UP AND I MADE SURE THAT, THAT FRACTAL ZOOM AND THE OTHER DEMOS WERE LOADED IN.

Q: WHAT IS SAIC?

A: SAIC IS A GOVERNMENT SYSTEMS INTEGRATOR, SO THEY DO A LOT OF WORK WITH GOVERNMENT AGENCIES AND MILITARY ORGANIZATIONS, SO A LOT OF THEIR CUSTOMERS REQUIRE SECRET SECURITY CLEARANCES.

I BELIEVE THAT THEY WERE PLANNING TO USE THE DIAMONDTOUCH TABLE FOR A MAPPING APPLICATION.

Q: AND NOW I WANT TO TALK ABOUT A DIFFERENT APPLICATION CALLED TABLECLOTH.

A: YES.

Q: NOW, ARE YOU FAMILIAR WITH TABLECLOTH? A: I AM.

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Q: AND WHAT IS TABLECLOTH?

A: SO TABLECLOTH IS AN APPLICATION THAT WAS DESIGNED TO OPERATE ON THE DIAMONDTOUCH TABLE. IT WAS WRITTEN IN A LANGUAGE CALLED FLASH, WHICH A LOT OF GAME DEVELOPERS USE.

Q: OKAY. DID YOU PREPARE A VIDEO TO SHOW THE JURY HOW TABLECLOTH WORKS?

A: YES.

Q: CAN WE PULL UP DX 3952.102?

(WHEREUPON, A VIDEOTAPE WAS PLAYED IN OPEN COURT OFF THE RECORD.)

BY MR. JOHNSON:

Q: AND MR. BOGUE, CAN YOU EXPLAIN TO US WHAT WE SEE HERE?

A: YES. SO YOU SEE AN IMAGE AND WITH ONE FINGER YOU CAN KIND OF PULL THAT DOWN, AND THEN WHEN YOU LET GO, IT SNAPS BACK. IT'S ACTUALLY PRETTY SIMPLE.

MR. JOHNSON: NOW, YOUR HONOR, WE'D ASK THAT 3952.102 BE MOVED INTO EVIDENCE.

THE COURT: ANY OBJECTION?

MR. JACOBS: NO, YOUR HONOR.

THE COURT: IT'S ADMITTED.

(WHEREUPON, DEFENDANT'S EXHIBIT NUMBER 3952.102, HAVING BEEN PREVIOUSLY MARKED

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FOR IDENTIFICATION, WAS ADMITTED INTO
EVIDENCE.)

BY MR. JOHNSON:

Q: DOES THIS VIDEO ACCURATELY SHOW THE OPERATION OF TABLECLOTH?

A: YES.

Q: AND HOW DID THE
PROGRAM GET ITS NAME TABLECLOTH?

A: SO THIS IS KIND YOU'RE AT A TABLE AND YOU WANT TO PULL SOMETHING CLOSER TO YOU, YOU CAN PULL THE TABLECLOTH AND THEN GRAB THE SALT SHAKER AND THEN LET GO AND IT'LL SNAP BACK.

Q: AND WHAT WAS THE --

A: AND I'LL POINT OUT THAT THIS DEMONSTRATION IS VERY SIMPLE AND IT -- AND THE AUDIENCE FOR WHO WE
WOULD SHOW THIS TO IS FLASH DEVELOPERS.

SO WHAT WE WANTED TO DO WAS ILLUSTRATE HOW EASY IT WAS TO WRITE AN APPLICATION USING FLASH FOR THE DIAMONDTOUCH TABLE.

Q: NOW, CAN YOU ESTIMATE HOW MANY TIMES YOU'VE DEMONSTRATED TABLECLOTH AND ITS SNAP BACK FEATURE OVER THE YEARS?

A: SO, I MEAN, WE HAD THIS IN THE MERL LOBBY AND IT WAS -- THERE WAS A SHORTCUT -- SO THIS RUNS IN

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INTERNET EXPLORER AND WE HAD SHORTCUTTED OUR INTERNET EXPLORER, SO ANYBODY COULD PLAY WITH IT.

WE DIDN'T KEEP RECORDS -- MERL DIDN'T REQUIRE PEOPLE TO, TO SIGN IN OR ANYTHING, SO IT'S HARD TO GIVE YOU A NUMBER ON THAT.

BUT I CAN TELL YOU THAT I PERSONALLY SHOWED IT TO PEOPLE BOTH IN THE MERL LOBBY AND ON -- AT TRADE SHOWS.

Q: OKAY. WHEN WAS TABLECLOTH WITH SNAP BACK FIRST DEMONSTRATED ON THE DIAMONDTOUCH SYSTEM?

A: SO IT -- AGAIN, IT WOULD HAVE BEEN IN THE LOBBY BECAUSE OUR SORT OF POLICY WAS TO LOAD IN THE LATEST SOFTWARE ON THE LOBBY MACHINE, THAT'S WHERE WE START OUT, AND THEN WE STARTED BRINGING IT ON THE ROAD.

I BELIEVE THAT THAT WAS JANUARY 2005 IS WHEN THAT WAS DONE, WHEN DT FLASH, WHICH WAS THE TABLECLOTH, WAS ONE OF SEVERAL APPLICATIONS THAT WERE WRITTEN IN FLASH.

SOON AFTER THAT WE HAD SOME MEETINGS OUTSIDE OF, OUTSIDE OF MERL. I KNOW THAT I BROUGHT IT TO THE NEW SCHOOL IN NEW YORK CITY LATER IN JANUARY.

Q: DID YOU DEMONSTRATE TABLECLOTH AT ANY TRADE SHOWS?

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A: YES. SO I REMEMBER SID, SOCIETY FOR INFORMATION DISPLAY, WAS ONE OF THE FIRST TRADE SHOWS THAT DIDN'T HAVE KIND OF A MILITARY AND SO I WAS SHOWING DIFFERENT DEMOS THAN NORMALLY SHOWED, AND SO I STARTED SHOWING THE FLASH THERE.

Q: NOW, WAS TABLECLOTH --

A: INCLUDING FLASH -- INCLUDING TABLECLOTH.

Q: WAS TABLECLOTH AVAILABLE TO CUSTOMERS AS WELL?

A: YES. WE PROVIDED IT TO -- I'LL POINT OUT THAT ANY DIAMONDTOUCH CUSTOMER OR USER WHO REQUESTED DT FLASH, WHICH INCLUDES ALL THE DEMONSTRATIONS THAT -- OF WHICH TABLECLOTH IS ONE OF THEM, ANYBODY
WHO ASKED FOR IT WOULD GET IT.

AND I KNOW A FEW PARTNER COMPANIES GOT IT IN EARLY, MID-2005.

Q: AND DT FLASH REFERRED TO TABLECLOTH, OR INCLUDED TABLECLOTH, AND TABLECLOSTH
WAS WRITTEN IN FLASH?

A: YES.

Q: AS A SOFTWARE?

A: THAT'S EXACTLY RIGHT.

Q: OKAY. SO WHAT WAS THE -- WHAT WAS THE PURPOSE -- WE HEARD ABOUT THE LOBBY A COUPLE OF TIMES AT MERL.

WHAT WAS THE PURPOSE OF PUTTING THE

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DIAMONDTOUCH SYSTEM IN THE LOBBY AT MERL?

A: SO THAT WAS MY IDEA, AND I WANTED TO SHOWCASE SOME OF THE INTERESTING THINGS AT MERL. MERL WAS KIND OF AN OPEN LAB AND HAD A LOT OF VISITORS AND I THOUGHT IT MADE SENSE TO HAVE SOMETHING RIGHT THERE IN THE LOBBY SO THAT, IN THE WAITING AREA WHEN VISITORS ARRIVED, WE COULD SHOW THEM THINGS. WE WANTED TO SHOWCASE OUR WORK.

Q: WHO WAS ALLOWED IN THE MERL LOBBY BACK IN 2004/2005?

A: SO ANY VISITORS, AND WE HAD A LOT. AGAIN, WE HAD MANY PEOPLE FROM COMPANIES AND UNIVERSITIES, FAMILY MEMBERS WOULD COME BY. SO, YEAH, IT WAS -- IT WAS OPEN.

Q: DID PEOPLE NEED SOME SPECIAL PERMISSION TO USE THE DIAMONDTOUCH SYSTEM IN THE LOBBY?

A: NO. WE PUT IT IN THE LOBBY SO THAT PEOPLE WOULD PLAY WITH IT.

Q: WAS A CARD KEY REQUIRED TO GET INTO THE LOBBY IN 2005 OR EARLIER?

A: NO. IT -- IN NORMAL BUSINESS HOURS, THE FRONT DOORS WERE OPEN. WE DID HAVE A RECEPTIONIST THERE, BUT IT WAS OPEN.

Q: NOW, DID THERE COME A TIME WHEN A CARD KEY WAS ADDED AFTER 2005?

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A: YEAH. THAT WAS LATER.

Q: WHEN WAS THAT? ,P>
A: I THINK IT WAS, LIKE, MID, LATE 2006. IT MIGHT HAVE EVEN BEEN 2007.

I KNOW THAT THERE WAS SOME RESISTANCE TO WANTING TO DO THAT BECAUSE PEOPLE WERE WORRIED ABOUT IT CHANGING THE CULTURE THERE BECAUSE WE HAD THIS SORT OF OPEN LAB. BUT EVENTUALLY WE DID ADD THE CARD KEY.

Q: OKAY. BACK IN 2004/2005, WERE ANY CONFIDENTIALITY AGREEMENTS REQUIRED TO USE THE DIAMONDTOUCH SYSTEM IN THE LOBBY?

A: NO.

Q: NOW, I HEARD A, A -- YOU REFER A COUPLE OF TIMES TO THE NEW SCHOOL.
CAN YOU TELL US ABOUT THE DEMONSTRATION THAT WAS MADE TO THE NEW SCHOOL.

A: YES. SO WE HAD A PRETTY LONG DAY OF DEMONSTRATIONS THERE. IT WASN'T JUST ME. THERE WERE A COUPLE OF OTHER PEOPLE FROM MERL, AND WE WERE SHOWING DIAMONDTOUCH AND THE DEMONSTRATIONS THAT YOU SAW HERE, PLUS MANY OTHERS.
ONE OF THE PEOPLE WHO CAME TO VISIT WAS THE PRESIDENT OF THE NEW SCHOOL AT THE TIME, SENATOR BOB KERREY. SO I REMEMBER THAT VERY WELL.

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AND, YEAH, WE WERE TALKING ABOUT THE POTENTIAL OF COLLABORATING WITH THEM WHERE WE WOULD PROVIDE THIS DIAMONDTOUCH HARDWARE, THEY WOULD WRITE SOME SOFTWARE, AND WE WOULD CREATE SOME SORT OF INFORMATION SYSTEM THAT SENATORS IN WASHINGTON D.C. COULD USE.

Q: DID YOU PARTICIPATE IN THE DEMONSTRATION TO SENATOR KERREY IN THE NEW SCHOOL?

A: I DID.

Q: WHEN DID IT OCCUR?

A: THIS WAS IN JANUARY 2005.

Q: AND WHAT WAS SHOWN AT THIS DEMONSTRATION?

A: SO WE SHOWED THE CORE SET OF DEMOS. I ALSO SHOWED THE DT FLASH DEMOS BECAUSE THEY HAD A FLASH DEVELOPER THERE.
AND THEN WE SHOWED A LOT OF OTHER DEMONSTRATIONS THAT WERE WRITTEN IN A DIFFERENT PROGRAMMING LANGUAGE CALLED JAVA. AND SO, YEAH, WE SHOWED A LOT OF DIFFERENT THINGS.

Q: WAS FRACTAL ZOOM SHOWN?

A: YEAH. THAT WAS ONE OF THE CORE DEMOS THAT I WOULD HAVE SHOWN FIRST.

Q: AND WAS TABLECLOTH SHOWN?

A: YES.

Q: NOW, CAN YOU LOOK AT EXHIBIT 713 IN YOUR

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BINDER, AND TELL US IF YOU RECOGNIZE THAT DOCUMENT.

A: I DO.

Q: WHAT IS IT?

A: THIS IS AN E-MAIL FROM ALAN ESENTHER TO
CHIA SHEN AND ME. THIS -- ALAN AND CHIA ARE BOTH EMPLOYEES AT MERL. AND THIS REFERS TO DT FLASH DEMOS AND A MEETING WITH BOB KERREY.

MR. JOHNSON: YOUR HONOR, WE ASKED THAT DX 713 BE ADMITTED.

THE COURT: ANY OBJECTION?

MR. JACOBS: NO, YOUR HONOR.

THE COURT: IT'S ADMITTED.

(WHEREUPON, DEFENDANT'S EXHIBIT NUMBER 713, HAVING BEEN PREVIOUSLY MARKED FOR IDENTIFICATION, WAS ADMITTED INTO EVIDENCE.)

MR. JOHNSON: IF WE MAY PUBLISH IT TO THE
JURY?

THE COURT: PLEASE.

BY MR. JOHNSON:

Q: WHAT, IF ANYTHING, DOES EXHIBIT 713 DESCRIBE OR REMIND YOU ABOUT WHETHER TABLECLOTH WAS INCLUDED IN THE DEMONSTRATION TO SENATOR KERREY?

A: WELL, THIS GIVES ME A GOOD SOLID DATE HERE FOR WHEN DT FLASH DEMOS WERE AVAILABLE FOR THIS MEETING

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TO BOB KERREY.

Q: NOW IS THAT?

A: SO THE DATE OF THE E-MAIL IS JANUARY 15TH, 2005. IT'S ALSO REFERRING TO A, A PATH THERE -- I DON'T KNOW IF YOU CAN SEE THAT. IT SAYS DISTRIBUTIONKERRY_1_18_15. IT WAS KIND OF STANDARD OPERATION AT MERL TO MAKE A FOLDER FOR A MEETING THAT HAD THE DATE FOR THAT MEETING. SO THIS WAS THE FOLDER WHERE ALL THE STUFF THAT WE WANTED TO SHOW AT THE NEW SCHOOL WOULD HAVE BEEN PLACED.

Q: OKAY. AND YOU'RE LISTED AS ONE OF THE RECIPIENTS?

A: YES. I'M THE "TO," THE SECOND PERSON IN THE "TO" FIELD THERE.

Q: WHERE DID THIS E-MAIL COME FROM?

A: FROM MY FILES.

Q: OKAY. NOW, MR. BOGUE, ARE YOU APPEARING HERE TODAY AS AN EXPERT ON BEHALF OF SAMSUNG?

A: NO. I'M HIRE AS A FACT WITNESS.

Q: OKAY. ARE YOU BEING COMPENSATED FOR YOUR TIME HERE TODAY TO TESTIFY?

A: IT'S NOT -- IT'S NOT IN THE MERL -- THAT'S NOT THE ONE THAT WAS IN THE MERL LOBBY, THOUGH.

Q: OH. THE ONE THAT YOU SOLD TO QUINN, EMANUEL ISN'T AVAILABLE TO US TODAY?

A: SO I SOLD ONE TO QUINN, EMANUEL THAT WAS IN THE MERL LOBBY, AND THAT'S IN WASHINGTON D.C. RIGHT NOW.
AND THERE'S A SECOND ONE THAT I SOLD TO QUINN, EMANUEL AND I BELIEVE THAT THAT IS SOMEWHERE IN THE COURTROOM NEARBY.

MR. JOHNSON: YOUR HONOR, I OBJECT TO THIS LINE OF QUESTIONING. WE HAVE -- WE HAVE IT HERE WITH US.

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GET IT?

MR. JACOBS: COULD WE HAVE IT?

MR. JOHNSON: IF YOU'D LIKE TO SEE IT.

MR. JACOBS: WE ASKED FOR IT.

MR. JOHNSON: SURE. DO YOU WANT US TO

MR. JACOBS: PLEASE.

(PAUSE IN PROCEEDINGS.)

MR. JACOBS: YOUR HONOR, I DON'T WANT TO
BURDEN THE COURT'S FILES WITH THIS DEVICE, SO WHAT I PROPOSE TO DO IS HAVE IT PHOTOGRAPHED AFTER COURT TODAY AND OFFER PHOTOGRAPHS OF THE DEVICE INTO THE COURT RECORD. WOULD THAT BE ACCEPTABLE?

THE COURT: THAT'S FINE.

BY MR. JACOBS:

Q: SO MR. BOGUE, WHAT HAVE WE GOT HERE? I'M HOLDING UP A MITSUBISHI THING ON A TRIPOD. WHAT IS THIS?

A: SO THAT'S A PROJECTOR AND IT'S ATTACHED TO A TRIPOD.

Q:
AND THIS IS PART OF THE DIAMONDTOUCH SYSTEM?

A: YES.

Q: SO THE IMAGE FOR DIAMONDTOUCH WOULD COME FROM A
PROJECTOR?

A: YES.

Q:
AND THE PROJECTOR, IT LOOKS LIKE IT CAN ROTATE

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ON THE TRIPOD. SO CAN IT GO IN DIFFERENT DIRECTIONS?

A: NO. IT'S INTENDED TO AIM DOWN ON TO THE SURFACE OF THE TABLE.

Q: CAN IT -- IN OPERATION, CAN IT PROJECT ON TO THE WALL?

A: NO. IT'S -- IT'S DESIGNED AS A TABLETOP COMPUTER.

Q: SO IS THERE -- IN THE DEMONSTRATIONS YOU WERE SHOWING OF THE SYSTEM, IT WASN'T EVER BEING PROJECTED ON TO THE WALL?

A: NO.

Q: AND THIS IS THE -- WHAT ARE WE LOOKING AT HERE, THIS WHITE OBJECT WITH THE GRAY BORDER?

A: SO THAT'S THE DIAMONDTOUCH -- YOU CAN SEE THE, THE MITSUBISHI ELECTRIC LOGO THERE. SO THAT'S A DT81.

Q: AND WHAT ARE WE LOOKING AT? WHAT'S THE SURFACE, THIS WHITE SURFACE?

A: SO THAT'S THE TOUCHSCREEN. THAT'S WHAT YOU WOULD TOUCH.

Q: YOU CALL IT A SCREEN, BUT IT'S JUST PLAIN WHITE. RIGHT, SIR?

A: IT IS WHITE.

Q: IT'S A WHITE PLASTIC?

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A: IT IS WHITE.

Q: IS IT A PLASTIC?

A: THE TOP SURFACE IS A POLYVINYL FILM, AND BENEATH THAT IS THIS GRID THAT I WAS REFERRING TO EARLIER.

Q: AND THE IMAGE IS PROJECTED ON TO THIS FROM THE PROJECTOR THAT WE'RE LOOKING AT OVER HERE; IS THAT TRUE, SIR?

A: THAT'S EXACTLY RIGHT.

Q: AND THE IDEA WAS THAT PEOPLE WOULD SIT AROUND IT AT A TABLE AND THEY WOULD USE THEIR HANDS TO MANIPULATE THE IMAGES; CORRECT?

A: YES.

Q: AND WE HAVE A PICTURE OF THAT, JUST TO GIVE THE JURY A CLEAR VIEW.
CAN I HAVE PDX 46.1 UP, PLEASE. SO THIS IS AN IMAGE FROM A PHOTOGRAPH
THAT APPEARS IN AN ARTICLE "PROTOTYPICAL DIAMONDTOUCH ON TO A TABLETOP SURFACE."
DO YOU SEE THAT,
BY MERL, FIGURE 1, SETUP, FRONT-PROJECTION
SIR?

A: YES.

Q: AND THAT IS, IN TACT, A PROTOTYPICAL PROJECTION OF DIAMONDTOUCH; CORRECT, SIR?

A: IT IS.

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Q: SO THE PROJECTOR IS OVERHEAD AND IT'S SHINING DOWN ON THE TABLE AND THE TABLE IS THIS GRAY AND WHITE OBJECT HERE; CORRECT, SIR?

A: IT IS.

Q: AND IN THE PRICE LIST, IF WE GO TO 662.002 -- IF WE GO TO 662, AND GO TO PAGE 2 OF IT.

A: THIS IS THE INVOICE THAT WE SENT TO SAIC.

Q: SORRY, YOU'RE CORRECT. IT'S AN INVOICE, NOT A PRICE LIST.
THERE'S A REFERENCE THERE TO A DRAFTING TABLE. DO YOU SEE THAT?

A: YES.

Q: AND THE DRAFTING TABLE IS A TABLE THAT WOULD HOLD THE DIAMONDTOUCH SURFACE?

A: EXACTLY RIGHT.

Q: AND THEN THERE'S A REFERENCE IN THAT INVOICE TO RECEIVER CHAIRS.

A: YES.

Q: CAN YOU EXPLAIN THE RECEIVER CHAIRS?

A: YES. SO THE MAIN THING ABOUT THE DIAMONDTOUCH TABLE THAT MAKES IT DIFFERENT THAN OTHER MULTITOUCH SCREENS -- SO DIAMONDTOUCH WAS MULTITOUCH, BUT AN INTERESTING THING ABOUT DIAMONDTOUCH WAS THAT IT WAS MULTIUSER. IT KNOWS WHO'S WHO.

THE WAY IT KNOWS WHO'S WHO IS WE WOULD

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TAKE THE SIGNALS THAT ARE COMING FROM THE TOUCH SURFACE AND, WHEN YOU TOUCH, YOU'RE COMPLETING A CIRCUIT TO THE CHAIR THAT PEOPLE ARE SITTING IN, AND EACH OF THE CHAIRS AROUND THE TABLE ARE CONNECTED. SO THAT'S HOW WE KNEW WHO'S WHO.
AND SO WHAT YOU'RE LOOKING AT HERE IS SOME SPECIAL CHAIRS THAT WE DESIGNED FOR USE WITH THE DIAMONDTOUCH TABLE.

THE DIAMONDTOUCH ALSO CAME WITH MATS THAT ARE SORT OF LIKE ANTISTATIC MATS THAT YOU PUT IN OUR OWN FURNITURE, SO LIKE IN THE LOBBY OF OUR BUILDING, WE USED THOSE MATS AND KIND OF HID THEM AWAY IN THE FURNITURE THAT WAS AROUND THE TABLE.

Q: SO ONE OF THE THINGS YOU WERE DEMONSTRATING WITH APPLICATIONS LIKE MANDELBROT, OR FRACTAL ZOOM -- THOSE ARE CHANGEABLE NAMES; CORRECT, SIR?

A: THAT'S CORRECT.

Q: -- WAS SORT OF THE MULTIUSER CAPABILITY; CORRECT, SIR?

A: ACTUALLY, NO. MANDELBROT WAS A SINGLE USER APPLICATION. SO MANDELBROT FOCUSSED ON MULTITOUCH, BUT IT DOESN'T DISTINGUISH WHO'S WHO.
SO WE HAD SOME APPLICATIONS THAT TOOK ADVANTAGE OF THE MULTITOUCH ASPECT OF DIAMONDTOUCH AND OTHER APPLICATIONS THAT TOOK ADVANTAGE OF THE

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MULTIUSER ASPECT OF DIAMONDTOUCH.

Q: NOW, ON MANDELBROT, FRACTAL ZOOM, THAT WAS DEVELOPED AFTER YOU HELD THE MEETING WITH THE APPLE REPRESENTATIVES; CORRECT, SIR?

A: CORRECT.

Q: SO YOU DIDN'T DEMONSTRATE MANDELBROT FRACTAL ZOOM TO APPLE AT THAT MEETING?

A: THAT IS CORRECT.

Q: WITH RESPECT TO TABLECLOTH, TABLECLOTH WASN'T ONE OF THE FOUR DEMOS IN THE STANDARD SET UP; CORRECT, SIR?

A: RIGHT. TABLECLOTH WAS LAUNCHED FROM A SEPARATE SORT OF APP LAUNCHER THAT APPEARED IN AN INTERNET EXPLORER WINDOW.

SO THERE WAS A SET OF ABOUT A DOZEN LITTLE APPS THAT WOULD -- THAT YOU COULD TOUCH ON AND LAUNCH AND THAT WAS THROUGH AN INTERNET EXPLORER WINDOW.

Q: AND WHAT IS YOUR RECOLLECTION OF THE FIRST

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DEMONSTRATION OF TABLECLOTH, SIR?

A: SO IT WOULD HAVE BEEN IN THE LOBBY AT MERL BECAUSE THAT'S WHERE EVERYTHING STARTS.
AND THEN SOON AFTER THAT, I STARTED SHOWING IT ON THE ROAD AND WE SHOWED IT AT THE NEW SCHOOL IN NEW YORK CITY.

Q: AND YOU SUBMITTED A DECLARATION IN THIS CASE BEFORE. DO YOU RECALL THAT?

A: I DO.

Q: AND DO YOU RECALL STATING THERE THAT YOU RECALL EXHIBITING THE TABLECLOTH APPLICATION TO CUSTOMERS AS EARLY AS 2006?

A: YES.

Q: NOW, IF WE LOOK AT THE -- AT EXHIBIT 2288, DO YOU SEE THERE'S --

A: I'M SORRY.

Q: -- YELLOW HIGHLIGHTING AROUND TABLECLOTH, 27.SWF?

A: YES.

Q: AND YOU REFERRED TO SWF?

A: THAT'S A SWIFT FILE. YES, THAT'S A FLASH FILE.

Q: AND DO YOU SEE THE DATE, THE LAST DATE MODIFIED THERE IS JUNE 13TH, 2005?

A: I DO.

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Q: AND YOU SHOWED TABLECLOTH AND YOU SHOWED THAT VIDEO AND YOU CALLED THAT SNAPPING BACK. DO YOU RECALL THAT?

A: YES.

Q: CAN WE LOOK AT THAT VIDEO SLOWLY?

(WHEREUPON, A VIDEOTAPE WAS PLAYED IN
OPEN COURT OFF THE RECORD.)

BY MR. JACOBS:

Q: CAN YOU NARRATE WHAT'S GOING ON, MR. BOGUE?

A: OKAY. SO THAT'S A TOUCH DOWN AND PULLING IT DOWN AND THEN AT SOME POINT THEY'LL LET GO -- YEAH. THAT'S PRETTY MUCH IT.

Q: AND WHAT IS ACTUALLY HAPPENING ON THE SCREEN AT THAT POINT, SIR?

A: SO THERE'S A FINGER TOUCHING DOWN AND MOVING ALONG THE SCREEN, STILL MAKING CONTACT WITH THE SCREEN, AND THEN THAT FINGER LIFTS UP.

AND WHAT THIS APPLICATION DOES IS BASICALLY DRAG THAT IMAGE DOWN, AND THEN WHEN YOU LET GO, IT SNAPS BACK.

Q: WELL, IT SNAPS BACK ALL THE WAY TO THE UPPER IMAGE, DOESN'T IT, SIR?

A: THE UPPER IMAGE? I'M SORRY.

Q: IT SNAPS BACK TO WHERE YOU STARTED, NOT TO THE TOP OF THE SECOND PHOTOGRAPH; CORRECT, SIR?

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A: SO IT -- YES, IT SNAPS BACK TO ITS ORIGINAL POSITION.

Q: AND SO IT'S NOT SNAPPING BACK ON AN IMAGE BY IMAGE BASIS, CORRECT, SIR? IT'S JUST GOING ALL THE WAY BACK TO WHERE YOU WERE WHEN YOU STARTED?

MR. JOHNSON: OBJECTION. COMPOUND.

THE COURT: OVERRULED.

THE WITNESS: I GUESS I ALWAYS SAW THIS
AS ONE IMAGE.

BY MR. JACOBS:

Q: WELL, IS IT ONE IMAGE, SIR?

A: YEAH, IT'S AN IMAGE OF THE DESKTOP.

Q: WELL, LET'S LOOK AT AGAIN SLOWLY.

(WHEREUPON, A VIDEOTAPE WAS PLAYED IN OPEN COURT OFF THE RECORD.)

THE WITNESS: ALL RIGHT. SO THE IMAGE REPEATS. THERE'S -- IT'S -- THE DESKTOP, IT'S LIKE A REPEATING DESKTOP.

BY MR. JACOBS:

Q: AND IT SCROLLS BACK TO THE FIRST IMAGE OF THE DESKTOP; CORRECT, SIR?

A: RIGHT. IT'S -- I MEAN, AGAIN, THE IDEA IS THAT YOU, YOU PULL THE TABLECLOTH DOWN AND THEN IT SNAPS BACK.

MR. JACOBS: JUST A MINUTE, YOUR HONOR.

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THE COURT: IT'S ALMOST -- IT'S 4:33. CAN WE CONTINUE TOMORROW?

MR. JACOBS: YES, YOUR HONOR.

THE COURT: ALL RIGHT. SO IT IS 4:33. AND, AGAIN, I WANT TO THANK YOU FOR YOUR
SERVICE AND YOUR PATIENCE. PLEASE KEEP AN OPEN MIND. PLEASE DON'T DISCUSS THE CASE OR DO ANY OF YOUR OWN RESEARCH.

AND IF YOU WOULD PLEASE LEAVE YOUR NOTEBOOKS IN THE JURY ROOM FOR THE EVENING. WE'LL SEE YOU BACK HERE TOMORROW AT 9:00 WE ARE GOING EVERY DAY THIS WEEK. THANK YOU.

(WHEREUPON, THE FOLLOWING PROCEEDINGS OUT OF THE PRESENCE OF THE JURY:)

THE COURT: ALL RIGHT. THE RECORD SHOULD
REFLECT THE JUROR VERSUS LEFT THE COURTROOM. YOU ARE -- PLEASE, YOU CAN STEP DOWN.

THE WITNESS: OKAY.

THE COURT: DO WE HAVE THE PHOTOS FOR MR. BOGUE? DO THEY HAVE THEM OF MR. BEDERSON AS WELL?

THE CLERK: I DON'T BELIEVE I GOT THEM FOR MR. BEDERSON.

THE COURT: CAN WE GET -- WE'LL HOLE

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PUNCH THESE, BUT IF YOU CAN HOLE PUNCH THEM GOING FORWARD SO THEY CAN PUT THEM IN THEIR BINDER.

THE CLERK: OF COURSE.

THE COURT: SO I AM GOING TO ASK THAT IN YOUR EXHIBIT LIST THAT YOU GO AHEAD AND INCLUDE THE
LIMITING INSTRUCTIONS. IF YOU JUST PUT A COLUMN, I THINK THAT WOULD BE HELPFUL FOR THE JURY. OKAY. AND THEN ULTIMATELY, I'D TO GIVE ME A WORD PERFECT OR WORD VERSION
OF THIS AND I CAN REVISE THE LIMITING INSTRUCTIONS.
I'VE BEEN KEEPING MY OWN RECORDS AS WELL AS TO WHICH EXHIBITS HAVE BEEN COMING IN WITH LIMITING INSTRUCTIONS.

NOW, I UNDERSTAND THERE IS A RECONSIDERATION MOTION AS TO MR. YANG, SO IT'S 4:35.

WE WOULD LIKE YOU TO RECONSIDER, TO BE HEARD ON RECONSIDERATION OF DX 645.
EXHIBIT --

THE COURT: OKAY. LET ME --

MR. GOLDSTEIN: THIS IS THE SOURCE CODE EXHIBIT.

THE COURT: OKAY. ALL RIGHT. GO AHEAD.

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MR. GOLDSTEIN: -- FOR DR. YANG.

THE COURT: I RECALL THAT ISSUE. GO
AHEAD.

MR. GOLDSTEIN: THANK YOU. AS BACKGROUND, APPLE PRODUCED TWO GIGABYTES OF SOURCE CODE. THAT'S BETWEEN 350 AND 500,000 PAGES.

THE COURT: YOU KNOW WHAT? I'VE GONE THROUGH ALL THIS. YOU SHOW ME WHERE THAT WAS DISCLOSED. I DIDN'T SEE IT WAS -- THAT IT WAS DISCLOSED IN HIS EXPERT REPORT. SO IF YOU CAN POINT TO ME WHERE IT IS, THEN WE CAN KIND OF SHORT CIRCUIT THIS WHOLE THING.

MR. GOLDSTEIN: SURE, YOUR HONOR. IT'S HIS EXPERT REPORT --

THE COURT: I'VE SEEN THE EXPERT REPORT. HE CITES TO 38 BATES RANGES FOR THE FIRST CLAIM LIMITATION.

MR. GOLDSTEIN: EXACTLY.

THE COURT: ALL RIGHT. I DON'T THINK THAT'S SUFFICIENT. IF YOU HAVE ANYTHING ELSE, LET ME KNOW.

MR. GOLDSTEIN: THIS IS 38 RANGE IS 216 PAGES. DR. GIVARGIS THEIR EXPERT, KNOWS EXACTLY WHAT THIS IS. WE WENT FILE-BY-FILE.
I THINK THIS WOULD FOLLOW THE RULE THAT

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WE HAD WITH DR. MUSIKA TODAY WHO HAD A RANGE OF COMPETITIVE ANALYSIS DOCUMENTS. IT'S A PARTY ADMISSION.

THE COURT: IT'S A FIRST CLAIM LIMITATION. IT'S ABOUT SEVERAL PARAGRAPHS AND HE JUST CITES TO 38 BATES RANGES OF SOURCE CODE WITHOUT DIFFERENTIATING WHAT IS WHAT.
AND THEN IN HIS DEPOSITION, HE WASN'T ABLE TO RECALL WHICH BATES RANGE ASSOCIATED WITH THE APPLET.
SO IF YOU CAN GIVE ME HIS DEPOSITION TRANSCRIPT WHERE HE DOES SUDDENLY RECALL IT AND THAT WAS DISCLOSED, THEN I'LL LET IT IN.
BUT OTHERWISE I THINK IT'S TOO LATE FOR HIM TO COME TO TRIAL NOW AND SUDDENLY REMEMBER SOMETHING THAT HE DIDN'T REMEMBER DURING HIS DEPOSITION AND THAT WASN'T IN HIS EXPERT REPORT.

MR. GOLDSTEIN: IF I COULD JUST EXPLAIN? THE DEPOSITION, ONE PAGE WAS GIVEN TO HIM. HE SAID, "THERE'S THREE ELEMENTS IN THESE 200 PAGES. IF I COULD SEE MORE CONTEXT, I COULD TAKE YOU THROUGH WHERE THEY ARE" AND NONE WAS PROVIDED.

THE COURT: THAT'S NOT SUFFICIENT DISCLOSURE. SO GIVE ME SOMETHING THAT, THAT IS A DISCLOSURE OF WHAT HE'S GOING TO SAY AT TRIAL AND I

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WILL LET IT IN. BUT IF YOU CAN'T DO THAT, THIS OBJECTION
IS GOING TO BE REMAIN SUSTAINED.

MR. GOLDSTEIN: WELL, YOUR HONOR, THEN I
WOULD, I WOULD SUGGEST THAT THE ONE, WE CAN SUBMIT SOMETHING TONIGHT, BUT --

THE COURT: NO. I WANT YOU TO DO IT NOW. I ALREADY LOOKED AT ALL OF THIS LAST NIGHT. I ISSUED A RULING ON THIS LAST NIGHT.
YOU ARE NOW ASKING FOR RECONSIDERATION. YOU GAVE ME NOTICE THIS MORNING AT FIVE TO 9:00 THAT YOU WERE GOING TO ASK FOR RECONSIDERATION. WHATEVER YOU HAVE, SHOW ME NOW.

MR. GOLDSTEIN: OKAY.

THE COURT: I'M NOT GOING TO HAVE YOU FILING SOMETHING AT 10:30 AT NIGHT AND THEN I HAVE TO SCRAMBLE. SHOW ME WHAT YOU'VE GOT.

MR. GOLDSTEIN: UNDERSTOOD.

THE COURT: WHAT HAVE YOU GOT? WHAT HAVE
YOU GOT?

MR. GOLDSTEIN: I'VE GOT FOOTNOTE AND I WOULD ASK THAT HE BE ALLOWED TO TESTIFY AT THE LEVEL OF SPECIFICITY OF THE FOOTNOTE, TO SAY "HERE'S THE FOOTNOTE, I LOOKED AT IT, AND THIS IS MY TESTIMONY."

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AND THEY CAN CROSS-EXAMINE HIM ON THE WEIGHT IF THAT'S SUFFICIENT, OR IF HE IDENTIFIED IT ENOUGH.

BUT HE DID IDENTIFY BATES RANGES AND HE SHOULD BE ALLOWED TO SAY "HERE'S SOURCE CODE. IT WAS IN MY REPORT."

THE COURT: AND WHAT IS HE GOING TO SAY?
HE'S GOING TO SAY "THIS IS SOURCE CODE FOR AN APPLET" WHEN THAT'S NOT WHAT HIS EXPERT REPORT SAYS?
HIS EXPERT REPORT HAS A CLAIM LIMITATION THAT'S ABOUT THIS BIG, AND THEN FOOTNOTES, 38 BATES RANGES. DOESN'T SAY "THAT IS THE APPLET." DOESN'T -- SO IT'S JUST NOT CLEAR WHAT HE'S CITING THAT FOR.
SO TELL ME EXACTLY WHAT HE'S GOING TO
SAY.

MR. GOLDSTEIN: HE WOULD SAY "THIS IS SOURCE CODE WHERE YOU SEE, WHERE THE -- WHERE THERE'S A MUSIC BACKGROUND PLAY OBJECT WITH APPLICATION MODULE WITH AN APPLET," AND THAT'S ALL HE'LL SAY.

THAT'S THE LEVEL OF SPECIFICITY IN THE REPORT AND THEY CAN CROSS HIM ON THE WEIGHT AS TO WHETHER THAT'S ENOUGH TO SHOW THAT ELEMENT OR NOT.

MR. LEE: YOUR HONOR, THAT -- HE SHOULD NOT BE ALLOWED TO TESTIFY TO THAT.
AS YOUR HONOR SAID, HE HAS THIS LONG CLAIM LIMITATION, AND YOU WILL RECALL THAT YOU -- THIS IS ONE OF THE TERMS YOU DID CONSTRUE, AND SO THE APPLET HAS TO BE AN APPLICATION WITH AN APPLICATION MODULE.

SO TO KNOW WHAT THEIR INFRINGEMENT CASE IS, YOU HAVE TO KNOW WHAT THE APPLET IS. YOU HAVE TO KNOW WHAT THE APPLICATION MODULE IS.
HE, IN HIS REPORT, GROUPS EVERYTHING TOGETHER, DROPS A FOOTNOTE WITH 33 DIFFERENT SOFTWARE MODULES, AND SAYS "IT'S IN THERE."

LAST NIGHT THEY REPRESENTED TO YOUR HONOR THAT ALL WE HAD TO DO WAS ASK WHAT WAS THE APPLET AND HE WOULD HAVE TOLD US.

AS YOUR HONOR KNOWS FROM THE TEN PAGES WE SUBMITTED, WE ASKED HIM 35 DIFFERENT WAYS, "JUST TELL US WHAT THE APPLET IS. TELL US WHAT THE APPLICATION MODE IS." THEY -- HE COULDN'T AND HE WOULDN'T.

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SO TO ALLOW HIM TO COME IN TODAY AND SAY -- IT SOUNDS LIKE IT'S TWO OF TWO THINGS. ONE POSSIBILITY IS "HERE ARE THESE 32. IT'S IN THERE SOMEWHERE. WE CAN'T TELL YOU QUITE WHERE. WE'RE NOT GOING TO TELL YOU QUITE WHERE. BUT IT'S IN THERE SOMEWHERE."

OR HE'S GOING TO GIVE US THE SPECIFICITY HE DIDN'T BEFORE.

EITHER WAY, HE SHOULDN'T BE ALLOWED TO TESTIFY TO IT. YOUR HONOR HAS BEEN VERY CAREFUL TO MAKE SURE THAT EITHER OF US, THE RULES APPLY TO BOTH OF US, NO ONE IS HIDING THE BALL ON WHAT THE CLAIM LIMITATION IS.

THIS IS A CLAIM LIMITATION THAT YOUR HONOR HEARD ARGUMENT ON AND YOUR HONOR CONSTRUED. IT HAS AT LEAST TWO SPECIFIC REQUIREMENTS, AN APPLICATION, THE APPLET, WITHIN THE APPLICATION MODULE.

HE WAS OBLIGATED TO ADD -- THEY HAVE THE BURDEN OF PROOF. HE WAS OBLIGATED TO SAY WHERE THIS IS IN THE SOURCE CODE.

THEY HAVE THIS LONG FOOTNOTE, WE ASKED, HE REFUSED TO IDENTIFY IT.
IT SHOULDN'T GO IN EITHER AS THIS 32 MODULE UNDIFFERENTIATED, NOR SHOULD HE BE ABLE TO

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IDENTIFY WHERE IT IS RIGHT NOW. LAST POINT IS THIS, YOUR HONOR. AS YOUR
HONOR KNOWS FROM THE DEPOSITION TRANSCRIPT, WE SPECIFICALLY SAID, "DOES THIS LONG FOOTNOTE INCLUDE THINGS THAT ARE NOT THE APPLET?"

AND HE SAID, "YES, IT DOES." "WHICH ONES AREN'T?" "I CAN'T TELL YOU RIGHT NOW."

MR. GOLDSTEIN: YOUR HONOR, IF I COULD BE
HEARD?

THERE'S A DIFFERENCE BETWEEN DISCLOSURE AND CROSS-EXAMINATION. IF HE ONLY SAYS WHAT HE DISCLOSED, "I LOOKED AT THE SOURCE CODE," MR. LEE IS FREE TO CROSS-EXAMINE HIM TO HIS HEART'S CONTENT. THAT GOES TO THE WEIGHT.

MR. LEE: YOUR HONOR, IT DOESN'T GO TO THE WEIGHT. IT GOES TO DISCLOSURE. THEY NEVER TOLD US WHAT THE APPLET IS. THEY NEVER SAID WHAT THE APPLICATION MODULE IS.

HE SAID, "HERE'S 32 DIFFERENT BATES STAMP RANGES," AND THE BEST HE COULD SAY AT HIS DEPOSITION WAS "IT'S IN THERE SOMEWHERE."
EXPERTS IN THIS CASE HAVE BEEN PRECLUDED FROM TESTIFYING WHEN THEY'RE ACTUALLY MORE FOCUSSED THAN THAT.

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THIS IS -- IF HE GIVES THAT TESTIMONY TOMORROW, IT WOULD BE THE FIRST TIME WE'LL KNOW WHAT HE'S CLAIMING.

THE COURT: ALL RIGHT. THE OBJECTION IS STILL SUSTAINED.
OKAY. IT'S 4:42.
WHAT ELSE? ANYTHING ELSE THAT WE NEED TO COVER TODAY?

MR. JACOBS: NOTHING FROM APPLE, YOUR HONOR.

THE COURT: OKAY. ANYTHING ELSE?

MR. VERHOEVEN: NO, YOUR HONOR.

MR. MCELHINNY: CAN WE HAVE A TIME ESTIMATE?

THE COURT: OKAY. I JUST NEED A MINUTE.

(PAUSE IN PROCEEDINGS.)

THE COURT: OKAY. APPLE HAS USED 14 HOURS 10 MINUTES, AND SAMSUNG HAS USED 14 HOURS
AND AND 58 MINUTES.

OKAY. ALL RIGHT. THANK YOU ALL VERY MUCH. I'LL SEE YOU TOMORROW MORNING. THANK YOU.

MR. VERHOEVEN: THANK YOU, YOUR HONOR.

MR. MCELHINNY: THANK YOU, YOUR HONOR.

(WHEREUPON, THE EVENING RECESS WAS
TAKEN.)

333

CERTIFICATE OF REPORTER

I, THE UNDERSIGNED OFFICIAL COURT REPORTER OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA, 280 SOUTH FIRST STREET, SAN JOSE, CALIFORNIA, DO HEREBY CERTIFY:

THAT THE FOREGOING TRANSCRIPT, CERTIFICATE INCLUSIVE, CONSTITUTES A TRUE, FULL AND CORRECT TRANSCRIPT OF MY SHORTHAND NOTES TAKEN AS SUCH OFFICIAL COURT REPORTER OF THE PROCEEDINGS HEREINBEFORE ENTITLED AND REDUCED BY COMPUTER-AIDED TRANSCRIPTION TO THE BEST OF MY ABILITY.